Minnesota is a governor’s signature away from becoming the first U.S. jurisdiction to explicitly ban the operation of prediction markets through legislation.
On Wednesday, the Minnesota House and Senate advanced a conference committee report on Senate File 4760, sending an omnibus bill to Gov. Tim Walz’s desk for final consideration. SF 4760, a public safety policy bill, also amends Minnesota laws related to impaired driving polices, theft and fraud policies, task forces and rulemaking.
The conference committee report was advanced by the House with a 100-32 vote, while Senate members approved the bill and its amendments following a 57-9 vote.
Brief history of Minnesota bill to ban prediction markets
The bill to ban prediction markets in Minnesota was introduced in March by Sen. Ronald Latz and referred to the Senate Judiciary and Public Safety Committee.
The committee advanced the measure with a series of amendments, with House members also approving the modifications before its eventual approval by both chambers this week.
An amendment included adding language from a similar measure that has failed to progress in the House. Lawmakers added language from Sen. John Marty’s prediction market bill, Senate File 4511. The language bans the operation of prediction markets.
It also prohibits businesses and people from advertising prediction markets.
What would Minnesota PM ban look like?
Under Minnesota’s prediction market bill, the North Star State is allowed to send cease and desist orders to prediction markets for operating in the state. Any prediction market or person who receives a C&D for operating the platforms has the right to request a hearing.
Latz’s bill provides a definition for prediction markets as any “system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract.”
The prediction market bill also takes direct aim at event contracts and views them as “bets” if an offering is a “contract to insure, indemnify, guarantee or otherwise compensate another for a harm or loss sustained, even though the loss depends upon chance; a contract for the purchase or sale at a future date of securities or other commodities.”
SF 4740 explicitly bans prediction markets from offering event contracts based on:
- War, terrorism, public health crisis, and state or national emergencies
- Any athletic event or game of skill
- Games that are played with cards, dice, equipment, or electronic devices.
- Short-term weather events or conditions
- Pop culture events, including awards and release dates
- The death, assassination, or attempting killing of a person or group
- State, federal, and local elections
- Legal actions, including jury trials, settlements, pleas, and convictions
- Whether a person makes a particular statement
The ban would make the operation and hosting of prediction markets in Minnesota a felony, while also banning the advertising of the financial platforms. Under SF 4760, advertising or marketing a prediction market is also a felony.
Next steps for Minnesota prediction market bill
The bill garnered Senate and House approval ahead of Minnesota’s legislation session adjourning on May 18. The bill is being sent to Walz’s desk for a potential signature, veto, or lack of action. If Walz decides to take no action, the prediction market ban will become law on Aug. 1.
If the bill to ban event contracts in Minnesota is enacted, prediction markets and the Commodity Futures Trading Commission (CFTC) can take legal action by filing suits. The CFTC has previously embroiled itself in legal disputes concerning prediction markets.
Most recently, the agency filed an amicus brief in support of Kalshi in its suit in Ohio. The amicus brief comes after Kalshi was denied a preliminary injunction in the state in March.
The CFTC claims that it has exclusive jurisdiction over regulating prediction markets. The agency asserts the same claim in other U.S. jurisdictions where it has active litigation.
