Minnesota Gov. Tim Walz Bars State Employees From Insider Bets on Prediction Markets

Minnesota Gov. Tim Walz signed an executive order this week barring state employees from using nonpublic information to place bets on prediction markets like Kalshi and Polymarket. The order arrived just a day after a federal judge blocked a separate Minnesota law that would have banned prediction markets outright, creating an unusual one-two punch of state action on the fast-growing prediction market industry.

The executive order specifically targets insider trading-style conduct, prohibiting state workers from leveraging privileged, nonpublic information to gain an edge on event contracts tied to elections, sports outcomes, or other real-world happenings. It’s a narrower, more targeted move than the broader ban Minnesota lawmakers had attempted earlier this year, and it comes at a moment when prediction markets are under intense legal and political scrutiny nationwide.

A Law Blocked Just Days Before Taking Effect

The timing here is notable. On July 27, U.S. District Judge Katherine Menendez granted a preliminary injunction halting Minnesota’s first-in-the-nation law that would have made operating, hosting, or advertising prediction markets a felony. That law, signed by Walz back in May, was set to take effect August 1 before Kalshi, Polymarket, and the Commodity Futures Trading Commission sued to stop it.

Menendez sided with the plaintiffs, ruling that the Commodity Exchange Act likely preempts the state statute because the CFTC holds exclusive federal jurisdiction over swaps traded on designated contract markets — a category that covers both Kalshi and Polymarket US. Her order specifically bars Minnesota from enforcing the law against CFTC-registered platforms while the underlying case continues. A Kalshi spokesperson called the ruling clarification that “states cannot prohibit activities beyond their jurisdiction.”

Why the Executive Order Matters Now

With the outright ban frozen by the courts, Walz’s executive order signals the state is pivoting to a narrower governance approach it can control directly: internal conduct rules for its own workforce. Banning state employees from trading on nonpublic information mirrors a trend already playing out at the federal level, where the U.S. Senate voted in April to bar senators and staff from using prediction markets altogether.

The broader legal fight over Minnesota’s prediction markets law is far from settled. Menendez’s injunction preserves the status quo only until the case is fully litigated, and she noted in her order that the state law “may not be preempted in all its applications,” leaving room for Minnesota to potentially narrow its approach down the road. For now, though, Kalshi and Polymarket can continue operating in the state, and the fight shifts to how — not whether — states can regulate an industry that’s rapidly reshaping the line between prediction markets and sports betting.

Minnesota’s push also fits into a wider pattern of state-level pressure on prediction market operators, even as platforms like Kalshi and Polymarket continue to expand their footprint across the country. Other states have taken a different legal tack, arguing the platforms are running unlicensed gambling operations rather than legitimate derivatives markets — a distinction that will likely keep courts busy well beyond Minnesota’s borders.