North Dakota law bans sports betting, but this loophole lets residents do it anyway

In 2025, North Dakota’s Legislature voted to uphold its ban on online sports betting, but a loophole still allows residents to gamble on their favorite teams.

In 2018, a U.S. Supreme Court decision made sports betting federally legal, but many states — such as North Dakota, California and Texas — continued to outlaw the practice. There have been multiple attempts to change North Dakota’s sports-betting laws since the decision. Resolutions that would have put the question of legalization to voters failed during the 2023 and 2025 legislative sessions.

Under current law, North Dakotans are only able to gamble on sports in person at tribal casinos. Popular sports betting apps such as FanDuel and DraftKings are not available in the state. However, prediction markets such as Kalshi and Polymarket allow betting on sports online anyway.

These prediction markets let people wager on nearly any future event. On Kalshi, there were wagers available on which song will be No. 1 on the Billboard Hot 100 in January, what specific words President Donald Trump will say during press events, whether it will rain in Los Angeles this month and much more.

And while you can wager on nearly anything, sports are a large portion of these prediction markets. As of Jan. 5, users on the site have already wagered roughly $652 million on which NFL team will win the Super Bowl in February and $139 million on which team will be the NBA champion, according to Polymarket’s website.

The betting is not held simply to professional teams. There was roughly $1.7 million wagered on the Dec. 16 North Dakota State University versus Pepperdine University women’s basketball game, and roughly $2.3 million was wagered on the Aug. 30 University of North Dakota versus Kansas State University football game, according to Kalshi’s website.

How do prediction markets work?

The wagers are qualified as trade contracts, similar to buying traditional commodities futures or stocks, meaning the “trades” are managed at the federal level, not at the state level. Bettors are buying a share linked to an event. “Shares” can range from zero to $1, and a winning bet pays out the remainder of the dollar, according to Yahoo Finance.

For example, on one day, shares of “Yes” for the Bismarck Larks having a winning record for the season are selling for 40 cents. This means that 60% of people on the prediction market are betting the opposite and that, if the Larks have a winning season, the person who bought a “share” of yes when it was 40 cents receives a 60-cent payout.

If on the next day the Larks sign a phenomenal talent and more people start to buy shares of “yes” for the Larks to have a winning season, then the percentages may change and shares of “yes” may start selling for 50 cents. Those who buy a “yes” share at 50 cents would only receive a 50-cent payout if they are correct.

Prediction market loophole takes customers from North Dakota casinos

Ray Poitra, the sportsbook manager for 4 Bears Casino and Lodge in New Town, said it is difficult to gauge the specific impact prediction markets have on the casino’s sports betting business, but in his opinion, “It's got to be a big impact.” He said he has been to some training sessions that have discussed the rise of prediction markets, but it is something he still needs to dig into more.

“It basically is taking our customers,” Poitra said. “With all the gaming regulations, and licensing and everything that we need to do -- and then you have these other guys that can get around it.”

He is concerned by not just prediction markets but traditional sports betting apps finding ways to get around North Dakota’s laws by labeling some wagers as “contests.”

Despite the rise of prediction markets, Poitra said the sports betting business is steadily growing at casinos in the state.

“We do have players that come from Bismarck. We do have players that come from Minot, just because of what we offer,” he said.

Prediction markets are a regulatory ‘gray area’

Aaron Humel, the director of the Gaming Division of the North Dakota Attorney General’s Office, said the prediction markets are a “gray area” as far as regulation is concerned. He said the big question is whether sports betting is a game of chance or skill.

“If I go on the prediction markets and I'm picking something that I don't know enough about, I certainly can probably lose a lot of money there,” Hummel said. “But if there’s somebody that knows what's going on with, say, the NFL and knows players in and out, they could actually probably do pretty well in their predictions ... These businesses are really looking at individual state laws and how they can work their way around them.”

Hummel said he is also concerned about the prediction markets from a consumer protection standpoint. It is difficult to ensure consumers are not being misled by these companies when the industry is largely unregulated.

These markets are still new and developing quickly, so North Dakota is not the only state questioning how to respond to them, according to Hummel.

“It's crazy what you can actually find and do out there now. And it's a big issue to figure out and tackle. So a lot of states are in the lane we are right now. They're figuring out how they can act, how it fits within state laws, and then adjusting as needed,” Hummel said.

He said it is questionable if the prediction markets even fall inside the jurisdiction of the Gaming Division, which specifically regulates charitable gambling in the state.

“It's definitely a landscape that will need to be addressed as we go forward, and probably tools put into place to clearly identify what is legal and what isn't,” Hummel said.

He said sports betting’s rise in popularity has also led to new avenues for scams. One that he is seeing more frequently is pop-up ads claiming to be one of the state’s tribal casinos offering online sports betting, which is not legal and not offered by any casino in the state. He said some casinos in the state have been forced to post pictures of the ads on their websites stating that the ads are not affiliated with the casino and clarifying that the casino does not offer online gambling.

“We're moving quickly, and we're doing what we can here on the front end to understand what's out there and what's coming,” Hummel said. “A lot of people haven't even heard of a lot of these things that come about, so it’s moving fast.”

Despite the gray area some states are moving forward with regulation.

The Massachusetts Gaming Commission restricted the operation of sports prediction markets in the state in November, and on Jan. 20 a judge ruled that Kalshi cannot let Massachusetts residents bet on sports on its website. Kalshi has indicated it will appeal the decision.