Prof. Richard Painter Interviewed by Minnesota Lawyer About New Minnesota Law Banning Prediction Markets

Professor Richard Painter, S. Walter Richey Professor of Corporate Law, was interviewed by Minnesota Lawyer about the new Minnesota law that effectively bans prediction markets, the online platform bettors use to wager on a range of real-world events. The law makes it a felony to host or advertise the prediction markets. In passing the law, state lawmakers cited concerns about the prediction markets trying to evade state law by calling transactions on the websites “trades,” rather than bets, as well as the dangers of gambling addiction and large financial losses. Federal lawsuits against Minnesota have been filed to block the state’s prediction market ban from taking effect. Prof. Painter said the stakes are much higher than participants’ potential losses or danger of addiction. He considers prediction markets “a very serious risk to the integrity of government, including national security.” He said, “Prediction markets can give a ‘heads up’ to our adversaries as to what is happening; when bets are placed on government decisions, they can make those decisions a fait accompli, dramatically change the decisions that are being made. They might be able to predict when military strikes will happen. In my view, government officials should never be in prediction markets or discussing inside information with people who are on the outside.” He added, “We can’t prohibit people from betting due to the First Amendment and a number of other issues. But to have people involved in government decisions having anything to do with people who are betting is very problematic.”