Minnesota Primary Win for Peggy Flanagan Gives Tribes a Boost in Prediction Markets Fight

Tribal gaming advocates picked up a significant ally in the fight against prediction markets this week when Minnesota Lt. Gov. Peggy Flanagan won the state’s Democratic Senate primary, defeating moderate U.S. Rep. Angie Craig by a wide margin. Flanagan, a member of the White Earth Band of Ojibwe, would become just the fifth tribal member in U.S. Senate history if she wins the general election in November — and her victory lands at a pivotal moment in the escalating legal war between states and prediction market operators like Kalshi and Polymarket.

The primary wasn’t just about ideology. It became a proxy fight over prediction markets themselves. Craig accepted $15,000 in maximum individual contributions from Kalshi’s leadership — $7,000 from co-founder and CEO Tarek Mansour, $7,000 from co-founder Luana Lopes Lara, and $1,000 from head of corporate development Sara Slane — all logged in September 2025 federal filings. Flanagan took none, and made that contrast a centerpiece of her campaign, telling supporters that Kalshi’s donations to Craig were “not a coincidence” but an investment in “a candidate they believe will protect their interests.”

Minnesota’s Ban Sits at the Center of the Fight

Minnesota has emerged as the most consequential battleground yet in the prediction markets dispute. Lawmakers there passed SF 3432, the nation’s first outright ban on prediction markets covering sports, elections, and a long list of other real-world outcomes, and Gov. Tim Walz signed it into law in May. The statute would have made it a felony to create, operate, or even advertise a prediction market offering the banned categories of event contracts, with no carve-out for federally designated exchanges.

Kalshi, Polymarket, and the Commodity Futures Trading Commission sued before the law could take effect, arguing the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event contracts traded on federally regulated markets. Minnesota Attorney General Keith Ellison pushed back hard, calling the platforms predatory and insisting the state retains authority to regulate what amounts to sports and political betting. A federal judge ultimately sided with the companies, issuing a preliminary injunction that blocked the law just days before its August 1 effective date — a stinging, if temporary, setback for the state and its tribal gaming partners.

Tribes See a Broader Pattern Nationally

Minnesota’s case is only one front. Tribal nations in New Mexico — the Mescalero Apache Tribe, Pueblo of Isleta, Pueblo of Pojoaque, and Pueblo of Sandia — have sued Kalshi directly, arguing its sports event contracts function identically to sports betting and violate their gaming compacts regardless of whether Kalshi structures itself as a peer-to-peer exchange rather than “the house.” Similar tribal-led challenges have already played out in California and Wisconsin, making Minnesota’s the third major front in roughly a year.

Tribal gaming officials have described prediction markets as an existential threat to compacts that give tribes exclusive rights to offer certain forms of gambling within their states — rights that are legally and financially meaningless if unregulated federal exchanges can offer functionally identical sports contracts online without a compact, a license, or a shared-revenue agreement. Flanagan’s win doesn’t change any court’s calculus directly, but it puts a tribal member with a national platform and a direct financial contrast to Kalshi’s political spending one step from the U.S. Senate — a symbolic boost as the underlying litigation, which legal observers say may not be fully resolved until 2027, continues to play out in federal court.