Billboards popped up around the Twin Cities recently promoting DraftKings’ entry into the prediction market, which helps it get around laws in states that don’t allow legalized sports betting.
Minnesota lawmakers also passed a law banning prediction markets, but that law was put on hold by a federal court ruling in July just before the law was to take effect Aug. 1.
“It is a law that was passed with strong bipartisan support and signed by the governor, and we believe and hope it will be eventually implemented, but at this point no, it’s not being enforced,” says Sen. John Marty, DFL-Roseville, an author of a Senate bill banning prediction markets in Minnesota. “This is a loophole, as they see it, that they can get through.”
So, for now, Minnesotans can make predictions for money on several sites on everything from politics to sports to current events.
However, a separate federal court ruling last Friday in California found in favor of states that want to regulate prediction markets. These conflicting federal court rulings will likely mean this issue will be decided in the U.S. Supreme Court.
“So we’re sorta in the gray space, uncertain area,” says Pat Garofalo, a former Republican Minnesota House member who authored bills to legalize sports betting so it could be regulated and provide tax revenue. “Minnesota really did miss the boat. This is why a majority of states passed legalized sports gambling and enacted it.”
Some of the revenue would have gone to programs to help people with gambling addiction. As it stands, even with prediction markets at least temporarily not prohibited in Minnesota, there is no way for the state to tax or regulate them.
It’s also unclear what the U.S. Supreme Court will rule or when that might happen.
“I would not be willing to put a wager on how the Supreme Court is going to come down on this,” Garofalo told 5 EYEWITNESS NEWS.
Marty hopes the court will allow states to regulate prediction markets. “To make sure that gambling can be done but only in a safe, legal, regulated manner, not a Wild West style that prediction markets have brought,” he said.
Dozens of states have argued that these platforms are, in fact, gambling and should be subjected to state gaming laws and taxes.
