- ▸ Minnesota lawmakers revived the state’s prediction market ban after the Senate passed SF 4511, but the standalone effort faced procedural obstacles in the House. Lawmakers instead inserted nearly identical language into an important omnibus public safety bill.
- ▸ Conference committee negotiators unanimously adopted the prediction market provisions Friday, keeping alive a proposal that would impose felony penalties tied to operating, facilitating or advertising prediction market platforms.
- ▸ The legislation is advancing as federal/state tensions escalate, with a recent Semafor report saying CFTC Chair Mike Selig is monitoring Minnesota as a possible next front in the prediction market legal fight.
Minnesota lawmakers moved closer Friday to enacting one of the nation’s most expansive prediction market bans after quietly advancing the proposal through the state’s omnibus public safety bill. The public safety conference committee unanimously adopted the prediction market provisions during omnibus negotiations, keeping the language alive as lawmakers move toward final agreements.
Minnesota’s proposal stands out because it would not simply tax, license or limit prediction markets. The language now moving through SF 4760/HF 3990 would create sweeping new criminal prohibition on prediction markets in Minnesota, including felony penalties for operating, facilitating or advertising event contract trading platforms. The legislation also targets payment processors, geolocation services and data providers that knowingly support the markets.
The developments significantly improve the proposal’s chances of passage while potentially setting up Minnesota as another front in the escalating legal battle over whether states can restrict federally regulated event contracts. State lawmakers are already anticipating a challenge from the CFTC, calling it “almost a guarantee.”
Minnesota’s proposal comes as states increasingly pursue different strategies for responding to prediction markets. While Minnesota is advancing one of the country’s most aggressive prohibition efforts, Pennsylvania lawmakers on Friday introduced legislation that would instead tax and regulate prediction markets under Pennsylvania Gaming Control Board (PGCB) oversight.
State prediction market bills likely to face legal challenges
A recent Semafor report said Commodity Futures Trading Commission (CFTC) chair Mike Selig is monitoring states advancing legislation that would ban or regulate prediction markets, with Minnesota emerging as a possible next front in the fight. The report came after the CFTC has already launched legal actions against multiple states attempting to restrict prediction market platforms, including Arizona, Connecticut, Illinois, New York and Wisconsin.
The legal conflict generally centers on whether federally-regulated event contracts fall under the Commodity Exchange Act and exclusive CFTC jurisdiction, or whether states can classify and regulate the products, particularly sports event contracts, as gambling activity.
Gaming attorney Daniel Wallach also argued this week that state legislative efforts to ban prediction markets could ultimately push states into weaker legal positions once the measures become law. In a LinkedIn post, Wallach called the state prediction market bills misguided and premature “time-wasters.”
“Until the courts resolve the federal preemption issue that is currently the subject of multi-circuit, multi-year litigation, any state efforts to regulate PMs — under ANY state law — will get tied up in litigation,” Wallach said. “Further, once enacted into law, these bills become automatic tickets to federal court, where the states would be playing defense vs. prediction markets on the federal preemption issue (where results have been mixed) rather than going on offense in state court (where states can pursue immediate enforcement, are undefeated, and benefit from a more favorable legal standard).
House lawmakers pivoted after standalone path stalled
The standalone effort to ban prediction markets in Minnesota faced mounting procedural obstacles in the House even as the Senate advanced SF 4511, a bill targeting event contract platforms.
Minneapolis/St. Paul’s FOX 9 previously reported that House GOP leadership was arguing that the standalone proposal had missed legislative deadlines, complicating efforts to move the bill forward. But on the same day the Senate passed their bill, Rep. Emma Greenman successfully inserted nearly identical language into the state’s omnibus public safety package, SF 4760/HF 3990, through a House floor amendment.
The omnibus legislation is one of Minnesota’s major public safety bills, combining criminal justice policy and funding provisions into a broader package. The House adopted the amendment in a 72-59 vote before later approving the omnibus bill.
Greenman released a statement after the House passed the bill, saying the prediction market provisions would protect “our young people, our communities, and our public decision-making from these shadowy prediction gambling markets.”
“It is critical we act this year to address this explosion of gambling on almost anything and rein in these Big Tech billionaires who skirt the law to circumvent our state authority and hurt our children just to line their own pockets,” Greenman said.
Minnesota lawmakers brace for CFTC response: “It’s almost a guarantee”
After the House amended SF 4760/HF 3990 to include the prediction market provisions, as well as many other additions, the Senate refused to concur with the House changes, sending the omnibus legislation to conference committee negotiations.
Conference committee discussions moved forward Friday, when negotiators unanimously adopted the latest prediction market provisions during a hearing on the omnibus package. House research analyst Ben Johnson described prediction markets as “an opportunity for individuals to purchase futures securities based on the outcome of certain events, particularly sports events.”
Johnson said the proposal would prohibit the operation and advertisement of prediction markets in Minnesota while also restricting businesses that intentionally support the platforms.
Negotiators also discussed the newly prepared A17 amendment containing technical revisions and additional enforcement provisions, including authority allowing Minnesota regulators to issue cease-and-desist notices tied to prediction market activity.
Minnesota lawmakers openly acknowledged the risk of a CFTC lawsuit during earlier Senate debate surrounding SF 4511. According to FOX 9, Senate Minority Leader Mark Johnson warned lawmakers that the federal government had already sued states attempting to restrict prediction markets and suggested Minnesota could quickly become another target.
“They’re going to be coming to Minnesota soon,” Johnson said. “It’s almost a guarantee — every state that’s passed this so far has dealt with a lawsuit.”
State lawmakers test different prediction market approaches
Minnesota is not the only state where lawmakers are attempting to respond to prediction markets through legislation. But no other active state proposal appears to go as far as Minnesota’s current omnibus language, with other states generally pursuing narrower approaches tied to taxation, licensing or specific categories of contracts and participants.
Pennsylvania and other state lawmakers are now pursuing a markedly different approach from blanket bans. House Bill 2497, introduced Friday by Rep. Danilo Burgos, would regulate prediction markets under PGCB oversight rather than prohibit them outright, PlayPennsylvania first reported. The proposal would impose licensing requirements, taxation and consumer-protection rules similar to the state’s sports betting framework.
Kentucky enacted two separate prediction market-related measures this year. HB 904 prohibits entities licensed to conduct horse racing, sports wagering or daily fantasy contests in Kentucky from participating in or contracting with platforms that offer event contracts within the state. Separately, HB 757 imposed a 14.25% excise tax on prediction market operators tied to transaction fees generated from Kentucky users while stating the measure was not intended to legalize the activity.
In Iowa, SF 2470 would have required a license to offer event contract trading and impose a tax on adjusted revenues and amounts traded. The proposal passed the Iowa Senate 45-1 but ultimately stalled in the House amid questions surrounding federal jurisdiction, according to PlayUSA.
Illinois lawmakers have also introduced measures targeting prediction markets. SB 4168 would create a licensing and taxation framework under the Illinois Gaming Board, including a $1 million prediction market license fee and a 50% tax on adjusted gross receipts from contracts involving Illinois residents. A related House proposal, HB 5059, would create the ORACLE Act, restricting minors, certain participants and certain categories of markets, while also adding responsible gaming and advertising rules.
Hawaii’s HB 2198 would amend the definition of gambling to include prediction markets tied to topics like catastrophe, death, national security, politics and sports. California has seen the introduction of AB 1840, a bill that would prohibit public officials, employees, and lobbyists from trading event contracts using material nonpublic information, and AB 2617, which could ban platforms from allowing anyone under 21 to trade event contracts, while also forbidding advertising to minors.
What’s next for Minnesota?
After Friday’s conference committee vote, the next step is approval of the final omnibus conference report. Both the House and Senate must approve the package in floor votes before the bill can go to Gov. Tim Walz.
Minnesota’s regular legislative session is scheduled to adjourn May 18, so the window is rapidly closing. If passed, the prediction market provisions would take effect Aug. 1.
