Minnesota Legislature First to Pass Prediction Market Prohibition Bill

• Members of the Minnesota House and Senate approved legislation to ban certain prediction market event contracts
• The legislature is the first in the country to approve a bill to potentially ban certain event contracts
• SF 4760, on omnibus public safety package, was amended to include language banning certain prediction markets from Sen. John Marty’s (DFL-40) bill, SF 4511

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Members of the Minnesota legislature are the first in the country to approve a bill to ban certain prediction market event contracts in the state.

Both the Minnesota Senate and House of Representatives approved a conference committee report on SF 4760, an omnibus public safety package, which includes language to prohibit prediction market contracts based on sports, politics, war, weather, and other markets.

The bill now heads to Gov. Tim Walz (D) to potentially be signed into law.

Banning Certain Event Contracts

SF 4760 included language from Sen. John Marty’s (DFL-40) bill, SF 4511. The Minnesota Senate approved Marty’s bill by a 56-10 vote on April 30. However, the standalone bill gained little traction in the House.

Last week, language from Marty’s legislation banning certain prediction markets in Minnesota was added to SF 4760, which had already passed both legislative chambers, and was scheduled for a conference committee.

Despite several proposed amendments, Marty’s prediction market prohibition language survived the final passage of the bill. The legislation was sent back to the Senate and the House for final approval of the bill’s amendments.

The House passed the conference committee report on Tuesday night by a 100-32 vote, just hours after the Senate also approved the amendments by a 57-9 vote.

The legislation now heads to Gov. Walz for his signature.

The legislation prohibits prediction market contracts centered around the following types of markets:

• Whether a person will make a particular statement
• An athletic event or game of skill
• Any game played with cards, dice, equipment, or any mechanical or electronic device or machine
• War, state or national emergencies, natural or human-made disasters, mass shooting, acts of terrorism, or public health crises
• Federal, state, or local elections
• Legal actions, including but not limited to a civil or criminal suit, grand jury action, jury trial, settlement, plea, or conviction
• Weather
• Death, assassination, or attempted killings
• Events in popular culture, including but not limited to awards and the date a piece of entertainment will be released

Legal Challenges Likely if Signed

While Walz may sign the bill into law, there is no guarantee a Minnesota ban will be permanent.

Even if signed into law, the Commodity Futures Trading Commission (CFTC) would likely challenge the law in court. The CFTC has been active in recent weeks defending its jurisdiction in regulating prediction markets throughout the country.

The CFTC recently filed several lawsuits against states such as Wisconsin and New York to reaffirm its exclusive regulatory jurisdiction over prediction markets. State laws, the CFTC argues, are preempted by the Commodity Exchange Act.

Companies such as Robinhood and Kalshi believe that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in New Jersey, Nevada, and Maryland to defend its practices. These companies believe the CFTC is the only regulatory body that can legally block contracts from being offered to customers.

State gaming regulators maintain the markets need to be beholden to regulations, taxes, and license fees that sports betting and gaming operators are required to follow.