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Minnesota Passes First Explicit State Legislative Ban on Prediction Markets — Felony Penalties Hit Operators, Payment Providers, and Advertisers

SF 4760 passed 100-32 in the House and 57-9 in the Senate; if signed by Gov. Walz, hosting or advertising prediction markets becomes a felony from August 1 — payment providers and advertisers explicitly in scope.

Category: iGaming News - USA · By Growl Games Editorial Team · Sat May 16 2026 · Updated Thu Jul 23 2026

Minnesota Passes First Explicit State Legislative Ban on Prediction Markets — Felony Penalties Hit Operators, Payment Providers, and Advertisers

Table of Contents

Summary

The Minnesota Legislature passed SF 4760 on May 13, 2026 — an omnibus public-safety bill that includes the first explicit U.S. state-level legislative ban on prediction-market trading. The conference committee report cleared the House 100-32 and the Senate 57-9. The bill heads to Governor Tim Walz for signature. If signed, hosting, organising, advertising, facilitating, or providing payment services for prediction markets becomes a felony in Minnesota from August 1, 2026. The Commodity Futures Trading Commission (CFTC) has signalled it is monitoring the bill and is expected to file a federal preemption lawsuit, opening a new front in the parallel litigation already underway in Wisconsin, Arizona, Connecticut, Illinois, and New York.

What the Bill Does

The relevant language, drawn from Senator Ron Latz's standalone SF 4511, creates a new Section 609.7615 of Minnesota statutes prohibiting "prediction market contracts" — defined as "any system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract." Contracts tied to the following are explicitly within scope: sports events, skill-based games, political elections and outcomes, wars and national emergencies, natural or human-made disasters, mass shootings, acts of terrorism, public-health crises, civil and criminal legal proceedings (including grand-jury actions, settlements, pleas, and convictions), government decisions, and popular-culture events including awards and entertainment release dates. The prohibition extends to anyone who creates, hosts, advertises, facilitates, manages, or provides payment processing services for the platforms. Existing Minnesota gambling statutes are simultaneously amended to clarify that commodity and securities contracts are exempt from gambling laws "except as provided in section 609.7615." Regulators are granted authority to issue cease-and-desist orders and seek civil injunctions; continued operation after such an order would expose individuals and entities to felony charges.

The Procedural Path

Sen. John Marty's (DFL-40) standalone SF 4511 was approved 56-10 by the Minnesota Senate on April 30 but stalled in the House. To preserve the substance before session-end, Rep. Emma Greenman (DFL-63B) attached the Marty language to SF 4760 — a must-pass omnibus public-safety bill — via House floor amendment on May 8. When the amended bill returned to the Senate, members declined to concur with the House amendments, sending the measure to a conference committee. The committee approved compromise language retaining the prediction-market ban on May 9. Both chambers re-passed the conference committee report on May 13: the Senate 57-9 and the House 100-32. The combined margins exceed the threshold for a veto override should Governor Walz decline to sign. Minnesota Senate Minority Leader Mark Johnson (R) acknowledged during floor debate that federal litigation was "almost a guarantee."

Why the Scope Is the Story

Three features distinguish Minnesota's approach from the existing state-level enforcement against prediction markets, which has so far run through attorney-general civil actions, regulator cease-and-desist orders, and litigation under existing gambling statutes. First, SF 4760 is the first U.S. statute to define prediction-market trading specifically as a criminal act under state law, rather than reaching the platforms through general gambling prohibitions. Second, the bill's scope reaches payment providers and advertisers explicitly — modelled on the same logic India built into Rule 19 of its Promotion and Regulation of Online Gaming Rules 2026 and that Brazil deploys through CMN Resolution 5,298. The Minnesota model creates personal felony exposure for anyone in the value chain, not only the platform operator. Third, the categories of events covered extend well beyond sports — wars, public-health crises, civil and criminal proceedings, and popular-culture outcomes are all in scope. The combined effect is the broadest state-level statutory perimeter against event contracts to date.

The CFTC Lawsuit Question

A federal-preemption lawsuit from the CFTC is expected and was publicly previewed in the days before the bill's passage. The agency has already sued Arizona, Connecticut, Illinois, New York, and Wisconsin over similar state-level enforcement actions against Kalshi and other prediction markets, seeking declarations that state gambling laws do not apply to federally registered designated contract markets (DCMs). Last week, a Semafor report indicated the CFTC was monitoring Minnesota and considering pre-emptive action. CFTC Chair Michael Selig has stated publicly that prediction markets and sports betting are "two separate things" and that event contracts should be regulated as financial instruments. Operators including Kalshi, Polymarket, Robinhood Derivatives, and Crypto.com (Foris Dax Markets) have separately filed federal-court challenges in multiple state jurisdictions, with mixed outcomes — Third Circuit affirmation for Kalshi against New Jersey on April 6, 2026; Tennessee preliminary injunction for Kalshi in February; Massachusetts state-court ruling against Kalshi in January; and the Wisconsin federal court's May 11 ruling allowing the Ho-Chunk Nation's Indian Gaming Regulatory Act claim to proceed with a finding of "likelihood of success."

What It Means

For prediction-market operators, the Minnesota bill represents the most aggressive state-level legal posture yet. Sports event contracts represent roughly 90% of Kalshi's reported platform activity and more than $1 billion in annual revenue; Robinhood's event-contracts segment generated $147 million in Q1 2026, up 320% year-on-year. A successful Minnesota enforcement template — explicit statutory ban, felony penalties, payment-provider and advertiser exposure — would be portable across other state legislatures sceptical of federal preemption claims. For state-licensed sportsbook operators, the bill closes one part of the competitive asymmetry the American Gaming Association estimated at over $500 million in diverted sports-betting tax revenue in its State of the States 2026 report. For the CFTC, Minnesota is now the lead case for the federal-preemption position; a successful federal injunction against SF 4760 would discourage similar state legislation, while a federal-court ruling upholding Minnesota's statute would open prediction markets to a state-by-state criminalisation map. For offshore real-money operators serving U.S. users, the more durable signal is the model the Minnesota bill establishes: criminalising the entire value chain — operators, payment providers, advertisers — at the state level. That model is broadly portable to any state seeking to enforce against any form of online gambling regardless of the contract structure or technology stack.

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