How Minnesota Became the Front Line in the Fight Over Prediction Markets

Emma Greenman, a state representative in Minnesota, first became concerned about prediction markets early this year.

Teachers had complained to Ms. Greenman that underage users were downloading apps like Kalshi and Polymarket. She said she had grown worried that the platforms were becoming a back door to sports betting, which the state had never legalized.

“This wasn’t a problem we had, frankly, before 2025,” said Ms. Greenman, 47, a Democrat who also works as a voting-rights lawyer. “We see it as both a public safety and public health issue.”

So this spring, she worked with colleagues to introduce and pass a bipartisan bill to ban prediction markets, making Minnesota the first state to do so. A federal regulator and the companies immediately sued — and a federal judged paused the law’s enforcement, for now.

The legal battle has put Minnesota on the front lines of an escalating fight between states and the federal government over who regulates prediction markets. The closely watched case is expected to help set a precedent on whether states can pass laws banning the prediction markets — or whether federal regulators have the ability to pre-empt them.

“This is a test case of how much authority does the state have to step in,” said Richard Painter, a professor of securities law and legal ethics at the University of Minnesota Law School.