On March 24, Minnesota legislators moved forward with two significant bills aimed at regulating sweepstakes casinos and prediction markets, both of which have now cleared committee approval.
The first bill, SF 4474, seeks to ban online sweepstakes games and limit revenue generated from illegal gambling activities. It defines an “online sweepstakes game” as any game, contest, or promotion that:
- Is accessible online or via mobile devices
- Uses a dual currency system
- Allows players to trade currency for prizes, cash, or the chance to win such rewards
- Simulates traditional casino gambling
This legislation would make it illegal for anyone to operate, manage, or promote online sweepstakes games within the state. The restrictions would also apply to payment processors, platform providers, geolocation services, and media affiliates.
Additionally, the bill mandates state regulators to enforce penalties under Minnesota Statute 325F.755, which outlines consequences for violations of consumer prize promotion laws.
During the Senate Commerce and Consumer Protection Committee hearing, Senator Jordan Rasmusson, the bill's sponsor, asserted that sweepstakes casinos function as gambling entities despite their promotional appearance. He noted, “These are dual currency systems… played on casino games like slots, blackjack, and roulette. Effectively, it allows online gambling to occur in Minnesota.”
Rasmusson highlighted that the model meets the fundamental criteria of gambling, stating, “There is some consideration… a game of chance… and that you have that chance to win a prize.” He framed the bill as a necessary clarification of what constitutes a legitimate sweepstakes in Minnesota and as a prohibition on dual-currency casino-style games. He pointed out that other states have already taken measures to restrict or ban sweepstakes casinos.
Supporters of the bill, including tribal representatives and stakeholders in charitable gaming, argued that these platforms exploit loopholes to evade licensing, taxation, and the consumer protections that regulated operators must adhere to.
Opponents, including Patrick Fechtmeyer, CEO of ARB Interactive, cautioned that the bill would not eradicate the activity but rather drive Minnesotans towards offshore operators that operate under the radar. “If this bill is passed, it will not eliminate this activity… [it will] push Minnesotans to… offshore operators who hide behind shell companies,” he warned.
Fechtmeyer maintained that sweepstakes platforms operate within the law and that participation is always free. Lexi Morgan from the Social Gaming Leadership Alliance, a trade group for sweepstakes casinos, expressed concerns that the bill could overreach and inadvertently eliminate legitimate promotional sweepstakes.
The committee has approved SF 4474, sending it to the Judiciary Committee for further consideration.
The second bill, HF 4437, aims to prohibit specific prediction market contracts linked to real-world events. This legislation explicitly lists several types of event contracts that would be banned, including:
- Sports events or outcomes within sporting events
- Casino-style contests or gaming promotions
- Events involving particular individuals or groups
- Political outcomes, such as elections
- Catastrophic events, including wars or natural disasters
- Death or mass casualty incidents
HF 4437 extends these prohibitions to the entire ecosystem, affecting payment processors and financial institutions as well. The measure also restricts advertising for these prediction markets under certain conditions, particularly near schools.