A federal court ruling has stalled Minnesota's nation-leading effort to regulate prediction markets, allowing platforms like Kalshi and Polymarket to continue operations. U.S. District Court Judge Katherine Menendez ruled in favor of the federal government and tech firms, stating that Minnesota's law puts prediction market firms at real risk of financial harm. The ruling means platforms can continue offering wagers on everything from Twins games to Oscar predictions to political outcomes. Gov. Tim Walz responded by issuing an executive order barring state employees from using privileged knowledge to place wagers on these apps, emphasizing that public servants should not "make money off insider information." As reported by The Star Tribune, the ruling allows the state to apply existing Minnesota gambling laws, though it's unclear whether this will trigger another lawsuit.
Democratic senators have launched a campaign to shut down betting markets on California wildfires, warning of potential arson risks. According to reports from High Country News, Oregon Senator Jeff Merkley led a letter to CFTC Chairman Michael Selig on Monday, expressing concerns about traders potentially starting fires to win their bets. The campaign stems from wagers placed during the Palisades and Eaton fires that killed 31 people and destroyed 16,246 buildings in January 2025.
Traders placed $1.2 million in bets on California wildfires through Polymarket, the largest betting site for real-world events. As reported by High Country News, the platform opened its first wildfire bet on January 8, 2025, just one day after the fires began. The largest single bet of $711,587 focused on when the Palisades Fire would be fully contained, with the biggest pool inside that bet totaling $274,797. These bets were settled using data from fire.ca.gov, the state firefighting agency's website.
The CFTC's proposed new rule on June 10 covers terrorism, assassination, war, gaming, and illegal activity but excludes wildfire betting. As reported by The Star Tribune, the rule covers arson but not containment dates, creating a regulatory gap that senators want closed. Polymarket founder Shayne Coplan has defended the markets, telling CBS News that they carry the least risk and provide the most information. The platform added an on-chain detection system in May to address insider trading concerns. However, the CFTC's regulatory approach has drawn criticism from state officials and consumer advocates, with opponents arguing the agency is turning into a "gambling regulator" that allows prediction market companies to offer products under the guise of legitimate financial instruments.
The regulatory landscape has shifted significantly under the Trump administration, with the CFTC now allowing derivatives contracts on professional sports that were previously forbidden. Donald Trump Jr. serves as an adviser to Kalshi and Polymarket, with his investment firm 1789 Capital taking a stake in Polymarket as the company returned to operating in the U.S. last year. Kalshi reportedly gave the younger Trump a $300,000 stake in the company that has since surged in value. As reported by The Star Tribune, the CFTC's role has been criticized as "classic regulatory capture" by attorney Daniel Wallach, who noted the agency's approach "changed on a dime" when Trump started his second term. Minnesota lawmakers, led by Sen. John Marty, have expressed concerns about "off-the-charts" suicide rates among gambling addicts and what they describe as "corruption of the regulatory agency."
