Minnesota is considering new legislation that would make it illegal to engage in any activities associated with prediction markets.
The bill, which has been filed in the Minnesota State Senate for the present legislative session, is designed to classify different activities associated with prediction markets as felonies.
In particular, the proposed legislation aims to ban any activities related to making trades on future events, and is not limited only to sporting events.
It also includes such areas as elections, trials, natural phenomena, epidemics, and statements made by individuals.
Lawmakers have structured the language broadly, capturing both traditional betting-like activity and emerging financial-style contracts tied to event outcomes.
The measure introduces criminal penalties for a wide range of activities tied to these markets. Operating, managing, or facilitating a prediction market would constitute a felony.
The same applies to setting odds, handling funds, listing events, or acting as a counterparty to users’ positions. Even providing data services that help determine outcomes could fall under the prohibition.
Advertising such platforms is also addressed. The bill explicitly criminalises marketing or promoting financial or technological products that enable participation in banned prediction market activity.
This provision extends liability beyond operators to affiliates and media channels involved in dissemination.
Guidance offers restrictions, as well as exceptions
Another feature involves enforcement mechanisms. State regulators would have the authority to issue cease-and-desist orders against suspected violations.
Entities that continue processing payments or facilitating transactions after receiving such orders could face felony charges. This includes financial institutions, payment processors, geolocation providers, and platform suppliers.
This act makes changes to previous laws to ensure that licensing requirements conform to the new model. Persons who have committed any violations related to gambling will be disqualified or lose their licence.
This provision would come into force starting 1 August for offences committed on or after that day.
Exceptions do exist, however. The exemptions that apply under current gambling law include games or bets that are permitted by regulation.
These include state lotteries and pari-mutuel betting. Financial instruments, contracts, and insurance products are exempt under other regulations.
This bill demonstrates increased interest in regulating prediction markets in the US. The legislation seems to aim at bridging any gaps that currently exist between gambling and other betting systems.
If enacted, the law would significantly restrict access to prediction market platforms within Minnesota, while placing strict liability on a broad ecosystem of participants connected to the industry.
Battle for control over prediction markets heating up
As of April, a sharp divide has emerged between state regulators and federal authorities over the legality of prediction markets.
The states leading this fight include, Arizona, Connecticut, and Illinois, which have sent out cease-and-desist notices, with Arizona going further by filing criminal charges against Kalshi on the grounds that the company is running an unlicensed gambling operation.
Nevada, meanwhile, has obtained an injunction from the courts to prohibit operation without a gaming licence from the state.
In response to this “patchwork” of state restrictions, the federal government has launched a significant legal counter-offensive.
On 2 April, the Commodity Futures Trading Commission (CFTC) and the Department of Justice filed joint lawsuits against Arizona, Connecticut, and Illinois.
In it, they argue that the Commodity Exchange Act grants the federal government exclusive jurisdiction over these markets as event contracts.
This jurisdictional battle reached a turning point earlier this week when a federal appeals court ruled in favour of the CFTC against New Jersey.
That potentially sets a precedent that states cannot use local gambling laws to block platforms that are already federally regulated as designated contract markets.
https://next.io/news/regulation/minnesota-tables-bill-block-prediction-markets/