US Court Halts Minnesota Prediction-Market Ban, Siding With Kalshi and Polymarket

A US court has blocked Minnesota from enforcing its ban on prediction markets, siding with platforms Kalshi and Polymarket.

Judge Katherine Menendez of the US District Court for the District of Minnesota ruled on July 27 that the state law is likely preempted by the federal Commodity Exchange Act, according to CoinDesk. She granted a preliminary injunction sought by Kalshi, Polymarket and the Commodity Futures Trading Commission.

Menendez wrote that the plaintiffs had sufficiently shown they are likely to succeed on the merits of their claim that Minnesota law is preempted by the Commodity Exchange Act. She added that the central issue is whether the state can regulate trading in event contracts that qualify as swaps under the federal law.

Kalshi, Polymarket and the CFTC sued after Minnesota enacted a law earlier this year making the operation of a prediction market a criminal offense. They argue that event contracts on prediction markets fall under the CFTC's jurisdiction as swaps, meaning state regulation would encroach on federal authority.

The court said some event contracts could still be subject to state law. Menendez cited contracts tied to predicting the winner of a television program, but said it would be impractical to exclude only those contracts from the enforcement pause.

She also found that Kalshi and Polymarket could suffer irreparable harm if enforcement is allowed to proceed.

The injunction will remain in effect until the court issues a final ruling on the merits of Minnesota's prediction-market regulation.