Minnesota lawmakers advance bill targeting prediction markets

Minnesota lawmakers are moving closer to restricting prediction markets by advancing legislation that would bar platforms from offering contracts tied to sports, elections, weather events, wars, and other real-world outcomes.

Sen. John Marty introduced SF 4511, which has already cleared committee stages, including the Senate Finance Committee, and is now headed for further consideration by the full Senate. If approved, the measure would take effect on August 1.

The proposal would significantly narrow the types of contracts prediction market operators could offer in the state, largely leaving economic-based contracts and smaller niche offerings available.

“Kalshi now claims it's the first nationwide legal sports betting app, and we would argue it's not in compliance with our laws,” Marty told CBS. 

Regulatory concerns widen

The legislation comes as state officials continue to question whether prediction market operators are offering products that resemble sports betting without being subject to state gambling regulations.

Prediction markets allow users to buy and sell contracts tied to the outcome of real-world events, with payouts based on those results. Critics in Minnesota argue the platforms are operating in a legal gray area by offering contracts on sports contests, elections, and other events while avoiding regulatory requirements imposed on traditional sportsbooks.

The bill would prohibit contracts tied to sports, politics, weather events, wars, and several other categories that lawmakers consider controversial.

Supporters of the measure say consumer safeguards remain limited, and ethical concerns have grown as the sector expands.

Election wager controversy

Momentum behind the legislation increased after Sen. Matt Klein was fined by Kalshi after the platform said he placed a wager on his own campaign.

The incident added to concerns about potential insider trading risks and conflicts of interest tied to event-based contracts.

Klein admitted to the infraction and said it was an honest mistake. He said unclear rules in the industry led him to unknowingly engage in illegal transactions. The issue has drawn greater scrutiny ahead of a critical midterm election in November.

Even if the bill passes, its practical effect on the industry remains uncertain.

Several states have introduced similar measures aimed at restricting prediction markets, but enforcement remains complicated because the sector continues to operate under oversight from the Commodity Futures Trading Commission.

Multiple lawsuits are also seeking to address what critics describe as regulatory loopholes that allow prediction platforms to offer products that resemble gambling.

At the same time, Minnesota lawmakers are reviewing separate legislation that could legalize sports betting in the state, creating a parallel debate over how wagering products should be regulated.