What to know:
- Federal court blocks Minnesota’s prediction market law while related lawsuits proceed.
- The judge finds federal commodities law likely overrides Minnesota’s new state measure.
- State officials plan to defend the law as the federal jurisdiction dispute continues.
A federal judge has temporarily blocked the Minnesota prediction market ban while related lawsuits proceed. The court found that federal commodities law likely overrides the state measure. Enforcement was due to begin on August 1 under the newly approved statute.
U.S. District Judge Katherine Menendez issued the injunction on July 27. Her order grants relief to Kalshi, Polymarket US, and the Commodity Futures Trading Commission. Menendez said the plaintiffs were likely to succeed after a full trial.
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Why the Court Blocked Minnesota Prediction Market Ban
The ruling concerned express preemption under the Commodity Exchange Act. That law gives the CFTC exclusive jurisdiction over swaps traded on federally registered contract markets. Menendez found the Minnesota prediction market ban likely extends into that federally controlled area.
Minnesota approved the statute in 2026 to prohibit covered prediction markets. It would criminalize operators that create, run, or facilitate those products within the state. The measure covered contracts linked to sports, elections, government actions, and other events.
However, Kalshi, Polymarket US, and CFTC challenges to the law followed its enactment. The defendants claimed that prediction markets were swaps and hence governed by the CFTC. They asserted that Minnesota could not interfere with the regulatory authority of the CFTC over such instruments.
According to the court, there is a likelihood of substantial irreparable harm to plaintiffs in enforcing the statute. Menendez said the balance of harms supported temporary relief while litigation continued. In addition, the order only serves to maintain the status quo and does not permanently invalidate the Minnesota prediction market ban.
What Comes Next in Minnesota Case
The judge gave an initial opinion regarding the controversy. She did not give any decision on the question of preemption and First Amendment claims made by plaintiffs. These matters will be considered later as the case proceeds towards trial.
Attorney General of Minnesota, Keith Ellison, criticized the ruling and vowed to defend the law. According to Ellison, the prediction markets are illegal forms of gambling, and Minnesota has a right to protect its residents from unlicensed operators.
Kalshi welcomed the ruling and added that states cannot prohibit products outside their jurisdiction. Polymarket supported the ruling against the Minnesota prediction market ban. Both organizations can offer their covered contracts in Minnesota as long as the ruling is valid.
However, the ruling does not settle the broader state-federal oversight. Orders prohibiting certain actions of Kalshi have been acquired in Massachusetts, Michigan, Nevada, and Washington. Kalshi and Polymarket have been denied applications to halt the processes in Nevada and Washington.
How Injunction Removed August 1 Threat
A Michigan court order temporarily restricted Kalshi’s sports contracts. Before the Minnesota ruling, the CFTC asked the court to issue a decision by August 1. The regulator said it could seek emergency appellate relief if the district court failed to act.
Kalshi and Polymarket joined the CFTC’s request for a prompt ruling. An injunction lifts any threats that may arise due to the Minnesota prediction market ban. Nevertheless, Ellison said that the state will continue defending the law as the jurisdictional dispute proceeds.
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