Minnesota Felony Challenge Collides with Gibraltar Framework and US State Divergence in Prediction Markets

Key Takeaways

• Minnesota Court Battle: Gaming Today reports the start of legal action testing whether the state can classify certain prediction markets as felonies.
• Gibraltar First Mover: On 13 July 2026 the jurisdiction confirmed that a dedicated regulatory framework for prediction markets has come into force with Minister Nigel Feetham KC MP stating it delivers regulatory certainty.
• North Carolina Legalization: PYMNTS.com coverage confirms a new state law that officially makes prediction markets legal.
• Profit Concentration Data: Analysis covering 2.4M users, 588M trades and $67B volume shows the top 1% of profitable users capture 76.5% of all profits while roughly 69% of users lose money.

The court battle over Minnesota’s effort to make prediction markets a felony is underway. This development sits against a backdrop of sharply contrasting regulatory signals from other jurisdictions. North Carolina has moved to legalize them while the CFTC seeks to formalize restrictions on violence-based contracts. At the same time Gibraltar has implemented the first bespoke framework for the sector.

According to reporting by Gaming Today the Minnesota case directly tests boundaries around event contracts and CFTC preemption. The outcome could set precedent for how far individual states can go in criminalizing activity the federal regulator has permitted in other contexts.

Gibraltar Delivers the First Dedicated Regime

Gibraltar’s Ministry for Justice, Trade and Industry confirmed on 13 July 2026 that a dedicated regulatory framework for prediction markets has come into force. Minister Nigel Feetham KC MP described the move as fulfilling a commitment made earlier in 2026 after a visit to Hong Kong where he identified a commercial opportunity to diversify the economy.

Feetham subsequently introduced new gambling legislation in parliament that enables prediction markets to be licensed as betting exchanges. He later announced in Miami that Gibraltar would build the first bespoke regime. Feetham posted on X: “Today we are the first in the world to introduce a bespoke framework for prediction markets. This framework provides regulatory certainty for an emerging global industry, creates opportunities for investment and high-value jobs, and further diversifies Gibraltar’s economy.”

Feetham said in a LinkedIn announcement: “This is more than a new regulatory framework; it is a statement of intent. My ambition is to position Gibraltar as a leading jurisdiction for responsible digital innovation and for the development of new markets underpinned by high regulatory standards.” The framework is the second major regulatory initiative he has introduced in as many weeks following recent tokenisation legislation.

First Licences Already in Motion

Gibraltar already licenses one prediction market operator under its existing gambling framework. ADI Predictstreet holds that distinction making Gibraltar the only European jurisdiction so far to have directly licensed a business in the sector. Feetham said a first operator will now be licensed under the new dedicated regime shortly.

A second is lined up. On 10 June 2026 Wire Markets Ltd the prediction market subsidiary of WagerWire received an approval in principle. Zach Doctor, chief executive officer of WagerWire, said: ‘This is a transformational opportunity for WagerWire to fully realise our mission. For years, we’ve built products that challenge the status quo by introducing greater flexibility, liquidity, and control into traditional sportsbetting, and Wire Markets represents a natural extension of that vision.’ Feetham added that a further approval in principle is expected in the coming weeks.

From the supplier side this speed of licensing stands out. European regulated markets rarely move this quickly from policy commitment to operational approvals.

US Patchwork Adds Complexity

While Gibraltar builds a clear path other signals in the United States are mixed. North Carolina has officially made prediction markets legal according to PYMNTS.com. That development contrasts with the Minnesota case where authorities are pursuing felony classification for certain contracts.

Corroborating coverage from Deadspin shows the CFTC seeking to formalize restrictions on violence-based prediction markets. These parallel tracks create a fragmented map for operators and technology providers attempting to build compliant products at scale.

The Minnesota battle according to Gaming Today pits state authority against CFTC oversight of event contracts. Resolution could influence how other states approach similar questions and whether tribal sovereignty considerations enter the analysis.

Profitability Data Shows Extreme Concentration

@kober1337 posted on X: “Who Wins and Who Loses In Prediction Markets? Part 2

I read the updated version of the research paper about who actually makes money on Polymarket.

Dataset: 2.4M users, 588M trades, $67B volume.

Here are the main points:

Top 1% of profitable users capture 76.5% of all profits
Roughly 69% of users lose money
Winners are mostly makers, losers are mostly takers
Top 0.1% of earners provide 47.3% of their volume as makers
Removing even the minimum spread cost would move 18.5% of losers into non-negative PnL”

These figures drawn from the dataset lay bare the economics. Makers dominate the winner pool. The top 0.1% alone drive nearly half their volume through making. Such concentration raises questions about liquidity provision and platform incentives that go beyond licensing status.

What the Combined Coverage Underemphasizes

Reporting by European Gaming, Gaming Today, PYMNTS.com and Deadspin captures the regulatory announcements and licensing milestones effectively. Yet the coverage underemphasizes the operational mechanics operators must solve to survive in this environment. With roughly 69% of users losing money in a dataset spanning $67B in volume platforms cannot treat licensing as the sole milestone. Risk controls, maker-taker balance and compliance overhead become decisive.

Yoni Sidi said Gibraltar’s move ‘matters more as a signal than as a passport’, noting that a Gibraltar licence does not grant access to markets such as France, Germany or the Netherlands, where regulators have taken a stricter line. This gap between licensing and market access is exactly where supplier-side experience shows friction compounds fastest.

The Operational Calculus Ahead

Divergent rules across US states and the new Gibraltar pathway force operators to rank jurisdictions by both regulatory clarity and commercial viability. The data on profit concentration means platforms must design for the reality that a small cohort of makers generates the bulk of returns while the majority of participants lose. Those that solve for sustainable liquidity and user protection inside these frameworks will hold the advantage as more jurisdictions decide their stance.

Reporting: Can Minnesota Make Prediction Markets a Felony? Court Battle Begins – Gaming Today (news.google.com)