Minnesota is moving decisively to close what lawmakers see as significant loopholes in the state’s gambling laws. Two bills advancing through the legislature would effectively ban prediction markets and sweepstakes casinos.

The state Senate has already backed both pieces of legislation. SF4511, which targets prediction markets, passed 56 to 10 last week and now sits with the House Commerce, Finance, and Policy committee. A companion bill, SF4474, prohibiting sweepstakes casinos, has been assigned to the Public Safety Finance and Policy committee. House representatives have until May 18 to move both bills toward Governor Tim Walz’s desk.

Why Minnesota is Acting Now

The prediction market legislation gained momentum following a high-profile incident involving Minnesota Sen. Matt Klein, who wagered on himself to win his primary through the Kalshi platform. Klein settled with the company, agreeing to a $539.85 fine and a five-year ban. The incident highlighted what lawmakers see as genuine risks: insider trading, conflicts of interest, and opportunities for political abuse.

Sen. John Marty, one of the bill’s sponsors, framed the issue as a matter of legal clarity rather than ideology. “People who are pro-gambling and anti-gambling together can recognize that prediction markets are ripe for conflict of interest,” he said. Minnesota’s position is straightforward. Prediction markets on sports, politics, and other events constitute illegal gambling under existing state law.

Sweepstakes Casinos in the Crosshairs

The sweepstakes casino ban addresses a growing concern across multiple states. These platforms operate in a legal grey area, typically offering games of chance that skirt traditional gambling regulations. Only a handful of operators currently restrict Minnesota access voluntarily. If passed, the legislation would give the state’s Attorney General enforcement powers to pursue both operators and promoters.

Minnesota isn’t alone in moving against sweepstakes casinos. Indiana and Maine have already enacted similar bans this year, joining several other states that took action in 2024. Tennessee attempted comparable legislation but failed to pass a bill, though the state has launched enforcement actions against many operators anyway.

Part of a Broader Picture

These bills reflect Minnesota’s distinctly cautious approach to gambling. The state currently prohibits both retail and online sports betting, and a proposal to legalize sports wagering failed to gain traction earlier this year. The prediction market and sweepstakes bans fit neatly into that framework, suggesting little appetite among state lawmakers for expanding gambling access.

Both bills appear well-positioned for passage, with the lopsided Senate vote on the prediction market bill signalling broad, bipartisan support. Whether the House moves quickly enough to meet the May 18 deadline? We’ll see. But the legislative momentum suggests these measures will reach the governor’s desk.

What the team thinks

PHILIPPA ASHWORTH: Minnesota’s legislative push represents a broader market correction we’re seeing across North America, where states are drawing clearer lines between legitimate gaming and unregulated alternatives. The passage of SF4511 and SF4474 will likely reshape the competitive landscape, potentially creating opportunities for licensed operators who can offer compliant prediction and sweepstakes products.

SHEENA McALLISTER: Philippa makes a fair point about clarification, though I’d add that Minnesota’s approach mirrors regulatory maturity we’ve seen in Europe for years. The key difference is timing, these bills are arriving as the sector matures rather than during its infancy, which should mean more sophisticated enforcement frameworks from day one.

PHILIPPA ASHWORTH: Absolutely, and that’s where the real business opportunity lies. States that regulate early with clear rules tend to attract institutional capital faster than those that wait. Minnesota operators who adapt quickly to these new parameters will likely find themselves with competitive advantages and stronger investor confidence than their counterparts in more ambiguous regulatory environments.

SHEENA McALLISTER: The compliance costs will be substantial for smaller operators, but that’s actually healthy for market integrity. What concerns me more is ensuring the legislation includes adequate consumer protections alongside the restrictions, particularly around responsible gambling measures and dispute resolution mechanisms that players in Minnesota can actually access.