The Commodity Futures Trading Commission has filed a lawsuit against the state of Minnesota to prevent a new law from taking effect that would criminalize online prediction markets. The law, SF 4511, is set to go live on August 1 and would make it a felony to create, operate, or advertise prediction markets in the state.
What Minnesota’s law actually does
SF 4511 passed as part of a broader omnibus public safety bill in Minnesota. Under the new statute, anyone who creates, operates, hosts, or even promotes a prediction market in Minnesota faces felony charges. The penalties are serious: up to five years in prison and $10,000 in fines.
The definition of banned “event contracts” is sweepingly broad. It covers contracts tied to elections, sports outcomes, public health events, and various economic indicators.
Minnesota lawmakers have been clear about their reasoning. They view these contracts as illegal bets dressed up in financial jargon. The CFTC, unsurprisingly, disagrees. The federal agency considers prediction markets to be regulated financial instruments, specifically derivatives, that fall squarely under its authority.
