Minnesota Moves Toward Felony Ban on Prediction Markets
Key Facts
- Minnesota SF 4511 received a Senate committee report “to pass” and a second reading on April 27, putting it in position for a Senate floor vote.
- The bill would prohibit prediction markets tied to sports, esports, elections, legal outcomes, weather, pop culture, disasters, and other future events.
- Senate counsel says the bill would make operating a prediction market in Minnesota a felony punishable by up to five years in prison, a fine of up to $10,000, or both.
- The proposal arrives as the CFTC is suing other states and arguing that federally registered prediction markets fall under its exclusive jurisdiction.
Minnesota’s Prediction Market Bill Is Now One Step From a Senate Vote
SF 4511 is now awaiting action on the Minnesota Senate floor after advancing through committee and receiving its second reading on April 27.
The bill, authored by Sen. John Marty and coauthored by Sens. Jordan Rasmusson, Mary Kunesh, Erin Maye Quade, and Matt Klein, would prohibit certain wagers and business activity tied to prediction markets.
It applies to markets involving athletic events, esports, player statistics, elections, government actions, legal proceedings, weather, pop culture events, mass-casualty events, and public statements.
The Senate counsel summary states that the bill would make operating a prediction market in Minnesota, along with related conduct, a felony punishable by up to five years in prison, a fine of up to $10,000, or both.
A House companion, HF 4437, has also been introduced. That version moved out of House Public Safety Finance and Policy and was re-referred to House Commerce Finance and Policy, but the Senate bill is the more advanced measure at this stage.
The Bill Goes Beyond Platform Operators
SF 4511 is written to reach more than the company taking the customer’s trade, also targeting activity such as listing events, accepting or directing funds, determining pricing or settlement, providing verification services, processing payments, offering location services, and advertising or marketing covered markets.
That makes the proposal relevant not only to prediction-market operators, but also to vendors, payment partners, data providers, affiliates, and media businesses that support or promote these products.
Klein Disciplinary Case Adds Political Context
The bill’s movement follows Kalshi’s disciplinary settlement with Sen. Klein, one of the bill’s coauthors. Kalshi said Klein bought less than $100 worth of contracts tied to his own congressional candidacy and violated rules barring decision makers from trading on markets where they can influence the outcome.
Klein agreed to a five-year suspension from direct or indirect access to Kalshi and paid a $539.85 penalty, according to Kalshi’s notice.
The bill is broader than one lawmaker or one disciplinary notice, but the timing gives the debate an unusually concrete example of why states are scrutinizing prediction markets: political event contracts can create conflicts that look very different from traditional sports betting disputes.
Why This Matters For Bettors
For bettors, the first issue is access. Minnesota still does not have legal online sportsbooks, and prediction markets have increasingly been discussed as a way for users in non-betting states to trade on sports-adjacent outcomes through federally regulated event contracts. SF 4511 is designed to close that lane before it becomes a durable substitute for state-approved wagering.
That does not mean a Minnesota bettor would necessarily face the same risk as an operator or service provider. The bill’s most serious exposure is aimed at operating, facilitating, and supporting covered markets. But if enacted and enforced, the practical result would likely be fewer trading markets, more geofencing, and less product access for Minnesota users.
The broader industry issue is whether state gambling regulators can stop event-contract platforms at the border. The CFTC has already taken the opposite position in litigation against Arizona, Connecticut, and Illinois. In its April 2 release, the agency said it filed lawsuits challenging state actions against CFTC-registered designated contract markets and argued that Congress preferred a national commodities framework over a “fragmented patchwork” of state rules. CFTC Chairman Michael S. Selig said the agency would “safeguard its exclusive regulatory authority over these markets.”
That makes Minnesota’s bill more than a local gambling measure. It is part of a growing conflict over whether prediction markets are primarily financial exchanges, gambling products, or some hybrid category that existing law does not cleanly handle. Sports bettors should care because the answer will influence who gets to offer event-based products, which states can block them, and whether these markets develop nationally or fracture into state-by-state availability.
There is also a competitive angle. Licensed sportsbook operators have spent years navigating state licensing, tax, integrity, and responsible gambling requirements. Prediction-market platforms have been able to argue from a different legal foundation. If states like Minnesota can criminalize sports and political event markets, that protects the state-by-state gambling model. If the CFTC’s view prevails, federally regulated platforms could gain a structural advantage: broader access without having to win every state legislature one at a time.
For bettors, neither outcome is automatically better. State-regulated sportsbooks offer clearer consumer protections, dispute pathways, and responsible gambling systems. Prediction markets can offer broader access and different pricing mechanics, but they also carry legal and product uncertainty.
Minnesota’s bill is a reminder that the most important risk in this category may not be whether a market settles correctly. It may be whether the market is allowed to exist in a user’s state at all.
What Happens Next
The next step is the Senate floor. If SF 4511 passes the Senate, attention shifts to the House companion and whether lawmakers can move a final version through both chambers.
If the bill becomes law, litigation would be a realistic possibility. The CFTC’s current posture suggests it views state restrictions on registered event-contract markets as a direct challenge to federal authority. Operators would also have strong incentives to challenge a state law that threatens felony exposure for conduct they argue is federally regulated.
Platform response would likely come before any final court answer. Kalshi and other operators could geofence Minnesota, remove covered markets, adjust affiliate and advertising activity, or revise compliance language for users in the state. Vendors and media partners could also become more cautious if the law’s reach is read to include marketing, data, payment, or other support services.
If Minnesota advances this bill and avoids an immediate legal defeat, other states without legal sports betting may see a model for blocking prediction markets before they become entrenched. If the federal preemption argument wins, the opposite incentive emerges: prediction-market platforms could push more aggressively into sports-style event contracts while states look for narrower ways to regulate around the edges.
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Marcus has spent over 20 years navigating the legal side of online betting - from his early days consulting for offshore operators to helping licensed U.S. sportsbooks launch in regulated markets. He’s worked with compliance teams, reviewed licensing frameworks in 15+ states, and advised on some of the biggest regulatory shifts since PASPA was repealed.
At BettingScanner, Marcus serves as the voice of reason - translating legalese into plain English and helping bettors understand what’s legal, what’s risky, and where the gray areas live. If you’re ever unsure about the rules, Marcus is your man - as he probably helped write them.
