Lawmakers advanced a bill that would ban prediction markets in the state, while also hearing extensive testimony regarding a proposal to legalize online sports betting
Minnesota lawmakers took a decisive step toward banning prediction markets this week, while a parallel effort to legalize sports betting remains in limbo after an informational hearing in the Senate Committee on Commerce and Consumer Protection.
The committee progressed legislation targeting prediction markets on Tuesday and framed them as a form of illegal gambling.
Lawmakers also heard extensive testimony on a separate bill that would establish a regulated sports betting market. They did not hold a vote on the betting proposal, which underscores the ongoing divide in the state over whether and how lawmakers should expand legal gambling.
Prediction Markets Bill Advancing
Senate File 4511 aims to prohibit certain types of prediction market contracts in Minnesota. Lawmakers voted to advance the measure and showed strong support for treating these platforms as gambling operations and not legitimate financial tools.
The legislation would make operating a prediction market a felony offense, and the law would allow authorities to punish offenders with up to five years in prison and fines up to $10,000. Supporters of the bill argue that prediction markets blur the line between financial instruments and gambling.
Lawmakers repeatedly emphasized during the hearing that the bill focuses on prohibition rather than regulation. Sen. John Marty remarked, “We’re saying no, these are bets, sports bets, bets on politics, things that are currently illegal.”
Minnesota lawmakers followed a familiar path many states across the U.S. have taken, arguing that prediction markets should fall under state gambling laws.
Lawmakers also raised concerns about how these companies market their services. Sen. Jordan Rasmusson said during the hearing that the marketing departments often disagree with their internal legal departments.
SEE ALSO: Minnesota Lawmakers Advance Sweeps Casinos, Prediction Market Ban Bills
He pointed towards a Kalshi ad that claims to be the first app for “legal sports betting in all 50 states,” despite ongoing legal disputes over its status. He said, “They’re telling consumers they’re a gambling company, but when they get sued, they say they’re futures markets.” Sen. Rasmusson also mentioned the possibility that these sites could start taking bets on the outcome of a roulette wheel.
Enforcement and Legal Clarity
The legislation would expand enforcement authority and allow regulators to issue cease and desist orders while also pursuing legal action against prediction market operators. Regulators currently face complications due to a legal gray area. The bill attempts to give state authorities clearer ground to act by explicitly classifying prediction markets as betting.
This suggests that enforcement would follow a familiar pattern. Sen. Marty explained, “We think it’s illegal, cease and desist, and then it’s up to local prosecutors.”
Sports Betting Bill Draws Interest, But No Action
Immediately after the vote on prediction markets, the committee turned its attention to Senate File 4139, a comprehensive proposal to legalize and regulate online sports betting in Minnesota. Lawmakers presented the bill for informational purposes only and did not hold a vote.
The Department of Public Safety would oversee the new sports betting market if lawmakers move the bill forward. Other key provisions include issuing up to 11 operator licenses to tribal entities, establishing strict consumer protections, like a 21 age limit, and directing revenue towards responsible gambling programs and relevant initiatives.
Supporters frame the bill as a pragmatic response to an already thriving underground market.
A Multi-Billion Dollar Illegal Market
Industry representatives delivered testimony that painted a stark picture of the extent of sports betting already taking place in Minnesota.
Sports Betting Alliance Policy Director Cameron Onumah presented at the hearing and noted a 2025 study estimating that Minnesota bettors wager between $1.5 billion and $3.8 billion each year through illegal channels. Advocates argue that offshore platforms handle most of this activity and that they usually offer little or no consumer protection.
In a live demonstration for the committee, Scott Ward of law firm Orrick Herrington & Sutcliffe, who represents DraftKings, FanDuel, BetMGM, bet365 and Fanatics, showed how easily users can access these sites.
He showed he could sign up on MyBookie with minimal verification using a Minnesota zip code and deposit and place bets with no issues. Ward emphasized how he did not have to undergo additional age verification checks. He said, “Anybody who wants to bet on sports can use this,” after demonstrating multiple offshore platforms accessible in Minnesota.
The Case For and Against Regulation
Supporters of legalization argue that a regulated market would bring benefits such as stronger consumer protection, capturing revenue that currently goes to offshore operators, redirecting that revenue towards important public programs, and displacing illegal sites over time.
The bill includes provisions requiring a baseline study of gambling prevalence and ongoing monitoring of public health impacts.
Concerns about social costs dominated Tuesday’s discussion. Lawmakers questioned whether legal sports betting would increase problem gambling rates. Industry representatives pointed to studies suggesting that severe gambling addiction rates remain relatively stable at about 1% to 2% of adults, even in states with legal betting.
However, skeptics cited research indicating that expanded sports betting access may increase financial harms. One senator cited recent studies linking legal sports betting to higher levels of financial distress.
The sports betting proposal faces an uncertain future, as lawmakers have repeatedly defeated previous attempts to legalize the activity due to concerns about social costs.
The post Minnesota Senate Committee OKs Prediction Market Ban, Debates Sports Betting appeared first on Gambling Insider.
