The Minnesota Senate is closer to a vote on one of the nation’s first prediction market restriction bills after lawmakers advanced a ban bill Friday.
- Minnesota lawmakers advanced a bill to ban prediction markets offering sports, political, and non-investment event contracts.
- The legislation targets operators, classifying sports event contracts as illegal gambling and restricting use of federal exemptions.
- The proposal reflects growing national pushback, with legal battles likely as states challenge federally regulated prediction markets.
If passed, the bill would reinforce the state’s existing bans on all forms of online gambling. All prediction markets that are deemed not to be a “legitimate” investment tool would be prohibited from accepting event contracts on sports, politics, or other non-investment related events.
The Senate Rules and Administration Committee approved the bill forward on a voice vote Friday. A full Senate vote could come later this month.
The bill would also need to clear the full House before it could take effect. A companion House bill has not yet advanced to a floor vote in that chamber.
The legislation is one of the first state-level efforts to regulate prediction markets such as Kalshi and Polymarket. Minnesota’s effort comes as a handful of other states, as well as Congress, consider regulations or bans on these platforms.
The federal government has maintained it has sole authority to regulate prediction markets. It is involved in prediction market legal challenges in more than a dozen states and would undoubtedly challenge Minnesota’s proposal if it passes into law.
Ban bill co-sponsor John Marty said during a legislative hearing Thursday that legal and regulatory authority has not kept up with prediction market’s rapid growth over the past two years. That growth is set to accelerate, Marty told the Senate Commerce and Consumer Protection Committee Thursday, and that lawmakers need to take action before the evolution becomes uncontainable.
“I'm afraid, and I think all of the folks who are working in regulation and in Minnesota's lawful gambling businesses and so on, they all recognize this is just totally running under the radar,” Marty said.
Minnesota prediction market bill details
Marty’s bill would remove prediction markets’ ability to rely on federal commodity futures trading exemptions when they offer contracts beyond their scope from prior decades. That would include a prohibition on sports event contracts, which make up roughly 85% of the current prediction markets’ trading volume.
The bill would clarify any such sports event contract as an illegal gambling form. Minnesota is one of 11 states that have no legal online or in-person sportsbooks.
Marty’s bill also bans trading on political or military actions. These contracts have generated prediction market news and garnered increased scrutiny in the wake of multimillion-dollar trades shortly prior to U.S. military action in Venezuela and Iran.
There is some wild language in this Minnesota house bill that bans operating & advertising prediction markets. It also appears to make market making a felony.
— Fairplaygov (@fairplaygov) April 9, 2026
HF4437 is currently being discussed in a House committee meeting now. pic.twitter.com/RKT6jtNqFe
Marty said Thursday the bill targets prediction market companies, not individual users. Operators could be charged criminally if they accept prediction markets on prohibited events or intentionally provide the digital infrastructure, such as odds setting or administration for these prohibited events.
The bill does not apply to regulated casino gaming on tribal lands, horse tracks, or existing charitable games such as pull tabs or raffles. It likewise doesn’t impact trading on commodities such as crops.
The ban would take effect Aug. 1, though prediction markets operating in the state would undoubtedly seek legal action beforehand.
Increasing pushback
Major U.S.-focused prediction markets reached the public consciousness around the 2024 presidential election. Their presence has accelerated since sports event contracts launched ahead of the 2025 Super Bowl, with both positive and negative attention increasing as the leading platforms see their trading volumes continually increase.
Sports, the major revenue driver, have been a target of roughly two-dozen state gaming regulatory bodies that have sought to push out these operators for what they consider unlicensed gambling. Several leading prediction markets have met nearly every regulatory crackdown attempt with legal challenges, with some preemptively suing state regulators.
Most courts have sided with the gaming regulators, including a Nevada court that forced Kalshi to stop accepting trades from customers in the state. That case is under further appeal.
A New Jersey court sided with the prediction markets against regulatory efforts earlier this month. Both sides believe a final determination is headed to the Supreme Court.
In the meantime, lawmakers from both parties have sought greater regulatory control. Regulation proponents including Minnesota Sen. Erin Maye Quade have argued that politically based event contracts are predisposed for illicit insider trading.
“So this is just ripe for corruption,” said Maye Quad, one of the bill’s co-sponsors, during a legislative committee testimony hearing Thursday. “And we've seen that, in addition to (prediction markets) trying to be just too cute by half and running around our sports betting laws, it’s also just a really, really bad thing for society, and we've seen that play out.”
