Minnesota lawmakers have approved sweeping new restrictions on prediction markets as part of a wider public safety bill, setting up a potential legal clash with federal regulators and industry operators.
The legislation, known as SF 4760, passed both chambers of the Minnesota Legislature this week after months of debate over the fast-growing prediction market sector. The bill now awaits further action before becoming law.
Prediction markets allow users to place wagers on the outcome of future events, ranging from sports matches and elections to economic developments and cultural events. Supporters argue the platforms operate as financial exchanges regulated under federal law, while critics say they closely resemble unlicenced gambling.
Under the Minnesota measure, operating or facilitating certain prediction market activities “for consideration and as part of a business” would become a felony offence.
New section for ‘prediction market’
The bill creates a new section in state law titled “Prediction Markets” and introduces one of the broadest state-level crackdowns seen so far in the United States.
The legislation covers wagers linked to sporting events, esports, elections, government decisions, legal proceedings, weather events and public health emergencies. It also includes contracts tied to wars, assassinations, mass casualty incidents and even whether an individual will make a specific public statement.
The restrictions extend beyond platform operators themselves. Companies providing payment processing, money transfer services, geolocation tools and event verification services could also face penalties if they knowingly support prohibited prediction market activity. Advertising and promotional activity connected to these platforms would also be banned under the legislation.
Separate such bills already passed
The proposal was not originally included in SF 4760 when the bill was first introduced. Separate prediction market legislation had earlier passed the Senate, but House lawmakers later inserted similar language into the broader public safety package.
After disagreements between the two chambers, the measure was sent to a conference committee, which approved compromise language retaining the prediction market provisions.
The revised bill later passed the Senate by a 57-9 vote, while the House approved it 100-32. The new restrictions are scheduled to take effect on 1 August 2026. The legislation arrives amid growing legal battles across the United States over who has the authority to regulate prediction markets.
The Commodity Futures Trading Commission has already challenged several states attempting to take action against prediction market platforms. The federal agency argues that event contracts fall under its exclusive jurisdiction. At the same time, companies, including Kalshi, have launched lawsuits against states seeking to block sports-related event contracts.
According to a recent Semafor report, the CFTC is closely monitoring developments in Minnesota and could potentially pursue legal action if the bill becomes law. Lawmakers themselves accepted that there could be court challenges later. Senate Minority Leader Mark Johnson warned that litigation was “almost a guarantee” given similar disputes unfolding elsewhere.
Despite concerns over legal challenges, many legislators argued prediction markets currently operate in a legal grey area that requires tighter oversight. Separately, Minnesota lawmakers are also considering action against sweepstakes casinos through another bill, SF 4474, which targets dual-currency gaming systems commonly used by some online operators.
However, that proposal has yet to advance in the House and appears increasingly unlikely to pass before the state’s legislative session ends on 18 May.
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