One state just decided that running a popular betting app inside its borders can land you in prison. Not a fine. A felony. Minnesota signed that into law, and the apps in the crosshairs aren't shady backroom sites. They're some of the fastest-growing platforms on the internet.
SF 3432 kicks in August 1, 2026. It targets prediction markets, the sites where people wager on sports, elections, movies, and other outcomes. Kalshi and Polymarket are the two biggest names. Minnesota is the first state to ban them outright. Gov. Tim Walz signed it.
NPR Minnesota Becomes First State Ban Prediction
The VPN part is the wild card
Here's the detail that should make every tech person sit up. This law doesn't just go after the betting companies. It reaches anything that helps a Minnesota resident dodge the geographic block, which means VPN providers. A state gambling law reaching down to target VPNs is genuinely weird.
So in theory, a VPN company that lets a Minnesotan keep using Kalshi after August could be on the hook too. How that gets enforced against software based all over the world? Nobody really knows yet.
It's already in court, twice
The ban hasn't even started and it's getting hammered from both sides. Washington moved first. On May 19, the Commodity Futures Trading Commission, the agency that polices futures and derivatives trading, filed suit to block Minnesota.
Then Kalshi sued the state itself on May 28. The company says these trades are "event contracts" regulated by federal law, so only the CFTC gets to govern them, not the states, and that's the Supremacy Clause, the rule that federal law beats state law when they clash. If that holds up, Minnesota's ban could be dead on arrival.
CoinDesk Kalshi Follows CFTC Suing Minnesota Over
Why this is really about sports
Call them prediction markets all you want. They're mostly sports betting now. On Kalshi, sports makes up more than 90% of the action, with people trading on games, player stats, injuries, and point spreads.
And it's huge. Together those two platforms now move around 6 billion dollars a week, most of it sports. That's the real reason states are panicking. Regular sportsbooks get licensed and taxed state by state. These apps argue they answer to federal commodity rules instead, sidestepping all of it. Michigan's attorney general already called Kalshi "indistinguishable" from regular gambling.
Where this lands
This is a mess, and honestly a predictable one. You've got a brand-new kind of online platform that grew faster than any rulebook could keep up. States say it's gambling. Operators say it's trading. Washington says back off, it's ours. And one of Kalshi's strategic advisors is Donald Trump Jr., which guarantees the politics stay loud.
For now, nothing's settled. SF 3432 is supposed to switch on August 1, but two federal lawsuits could freeze it before then. Whatever a judge decides won't just affect Minnesota. It'll set the template for every other state staring at the same question. When a betting app calls itself a stock exchange, who actually gets to say no?
