- ▸ Minnesota’s Senate bill would broadly outlaw prediction markets—targeting operators and infrastructure, with penalties up to 5 years in prison and $10K fines.
- ▸ Lawmakers are explicitly rejecting the “futures contract” framing, arguing event-based contracts (sports, elections, etc.) are illegal bets, not protected financial instruments.
- ▸ The push comes amid active court battles, with some rulings favoring federal CFTC jurisdiction, raising the likelihood Minnesota could face costly legal challenges if it moves forward.
A Minnesota Senate committee unanimously advanced legislation Tuesday that would ban offering prediction markets in the state, sending SF 4511 to the Senate Finance Committee as one of the most sweeping state efforts to target the fast-growing market. The bill would make it a felony to operate or facilitate such platforms, as lawmakers move to close what supporters describe as a loophole in existing gambling laws.
The proposal, sponsored by Sen. John Marty (DFL-Roseville) and introduced on March 17, was approved by the Senate Commerce and Consumer Protection Committee after clearing earlier committee stops. The bill has drawn bipartisan backing and support from stakeholders across Minnesota’s long-running gambling debates, with lawmakers framing it as a clarification of how existing gambling laws apply to prediction market platforms.
“Predictive market betting (has) grown very quickly, and I’m very afraid it’s gonna go through the roof if we don’t do anything this year,” Marty said during the hearing, adding that prediction market exchanges are “claiming to have a loophole in our gambling laws.”
Marty argued that the bill is meant to make clear that contracts tied to sports, elections, and other real-world events should be treated as illegal bets under Minnesota law rather than protected futures or commodities activity.
What the Senate bill would do
The Minnesota Senate proposal would create one of the most expansive state-level crackdowns on prediction markets to date, establishing a broad definition of event contracts and attaching felony penalties to their operation.
Under SF 4511, it would be illegal to create, operate, or manage a prediction market platform that allows users to trade on the outcome of future events.
The definition of those events is wide-ranging, covering sports and esports, elections and political outcomes, court cases and legal decisions, public policy and government actions, wars and military conflicts, natural disasters, public health events, weather, economic or financial outcomes, and also mention markets, where users trade on whether a specific word or phrase will be said by a particular person, often in speeches, debates, or interviews.
The legislation goes beyond targeting platform operators. It also applies to those who “facilitate” prediction market activity in Minnesota, including entities involved in payments, market creation, transaction settlement, or other services that enable trading. By extending liability to supporting infrastructure, the bill aims to cut off the ecosystem that allows these platforms to function.
Violations would be classified as a felony, carrying penalties of up to five years in prison and fines of up to $10,000. The bill also allows for both criminal enforcement and related penalties tied to illegal gambling activity, signaling lawmakers’ intent to treat prediction markets in line with other prohibited wagering operations.
In addition, the proposal prohibits advertising or promoting prediction market platforms within the state, further expanding its reach beyond core operations.
Debate centers on futures markets exemption in state law
A central focus of the hearing was how prediction markets compare to traditional futures and derivatives markets and whether those distinctions matter under Minnesota law.
Under current statute, certain financial instruments, including insurance and futures contracts, are explicitly exempted from the state’s definition of illegal bets. Supporters of the bill argued that prediction market platforms are attempting to use that exemption to justify offering contracts on sports, elections, and other events.
Sen. Jordan Rasmusson (R-Fergus Falls) said that he comes from an investment background and wanted to be certain that the bill would not hinder access to futures and derivatives trading in Minnesota.
“I don’t think that this would interfere in any way with a functioning financial market,” Rasmusson said of the bill. “I think we do want to make sure that legitimate investing, and when people are trying to use markets to mitigate risk…you can do that through the futures market, you can do that through derivatives contracts. And this is very clearly defining (restrictions) around athletic events, esports, game of skills, and events that are social in nature and not inherently tied to financial markets.”
Marty pointed out that SF 4511 includes a direct reference to the Minnesota statute that says “a contract for the purchase or sale at a future date of securities or other commodities” isn’t considered a bet. While platforms and federal regulators could argue that such an exemption is exactly why they can offer prediction markets in the state, Marty said this bill clarifies that there “are exceptions to that exemption.”
“We’ve already exempted futures markets broadly, but now they’re creating this new thing, they’re calling (them) ‘futures contracts,’ but they’re basically betting,” Marty said. “We’re saying, ‘No, that is betting, it’s clearly violation of our law,’ and I see this legislation as basically clarifying our current law.”
House companion bill faces uncertain path
The House companion to the Senate proposal, HF 4437, has advanced more slowly, raising questions about whether the legislation can reach the finish line this session.
The bill closely mirrors the Senate version by making it a felony to operate or facilitate a prediction market platform. Like SF 4511, it targets the infrastructure behind such markets, prohibiting the creation, operation, and management of platforms that allow users to place wagers on future events.
HF 4437 cleared its initial committee stop earlier this month and was re-referred to the House Commerce Finance and Policy Committee on April 7. The bill was heard there on April 9 but was laid over, meaning it was not advanced for further consideration. The hearing came after the legislature’s key March 27 deadline for policy bills to clear committees in their chamber of origin, leaving the measure with little path forward in the House this session.
If the Senate advances its version, however, the House could still take up that bill directly.
Some House lawmakers have raised concerns about the legal footing of state-imposed prediction market restrictions, pointing to ongoing litigation across multiple states over whether prediction markets fall under federal derivatives law and the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Rep. Nolan West (R-Blaine) said those unresolved cases could expose Minnesota to costly legal challenges if it moves forward before courts clarify the issue.
“Perhaps they would rule that the states have the right to regulate it,” West said during the April 9 committee hearing. “Until that happens, all we’re doing is engendering taxpayers to pay for litigation costs that we very likely will lose if any recent court case is determining it.”
State efforts diverge as legal battles intensify
West’s concerns come as courts across the country are actively weighing whether states have the authority to regulate or restrict prediction market platforms, setting up a clash with federal regulators.
In Arizona, a federal judge recently blocked the state from pursuing criminal enforcement against Kalshi, aligning with the CFTC’s position that prediction markets fall under federal jurisdiction. The decision marked one of the clearest early signals that federal law could limit state-level crackdowns. A similar dynamic is playing out in New Jersey, where a federal appeals court ruled the state cannot pursue enforcement actions against Kalshi while litigation is ongoing, allowing the platform to continue operating as the case moves forward.
The CFTC has also moved to challenge state-level actions more directly. The agency recently filed lawsuits against Illinois, Arizona, Connecticut, and Montana after those states took steps to restrict or block prediction market platforms, arguing the efforts interfere with its exclusive authority to regulate event contracts under the Commodity Exchange Act.
Beyond those high-profile legal battles, several other states are exploring ways to rein in prediction market activity through legislation. Lawmakers in states like New York, Illinois, Connecticut, Iowa, and Kentucky have introduced proposals that range from restricting specific types of contracts, particularly sports markets, to expanding enforcement authority, setting higher age limits, requiring state-level licensing, and capturing tax revenue tied to platform activity.
Minnesota’s proposal stands out for its breadth. While many states are testing narrower approaches or relying on litigation to define regulatory boundaries, SF 4511 would effectively prohibit the operation of prediction market platforms outright.
