US judge temporarily blocks Minnesota prediction market ban

A US judge temporarily blocks Minnesota from enforcing its new prediction market ban against Kalshi and Polymarket US. The preliminary injunction lets the CFTC-regulated platforms keep operating in the state while the court weighs whether federal commodities law preempts the statute, set to take effect Aug. 1.

Key Takeaways

• US District Judge Katherine Menendez granted preliminary injunctions for Kalshi and Polymarket US.
• The court found plaintiffs were likely to succeed, at least in part, on Commodity Exchange Act preemption claims.
• Minnesota’s ban was scheduled to take effect Aug. 1 and carried criminal penalties for supporting prediction markets.
• The injunction preserves the status quo, but the judge warned it could later be narrowed.

The ruling matters for traders and operators tracking US prediction market regulation. It pauses enforcement against federally regulated venues in Minnesota while litigation continues, according to Cointelegraph’s report on the July 27 court order. More coverage of similar market and regulatory flashpoints lives in our Fintech & Crypto Alerts hub.

Why did the judge temporarily block Minnesota’s ban?

Judge Menendez concluded the plaintiffs were likely to succeed, at least in part, on claims that the Commodity Exchange Act preempts the Minnesota statute.

She said several event contracts offered by the platforms appeared to qualify as swaps. That finding supports arguments that the Commodity Futures Trading Commission has exclusive jurisdiction over transactions involving those contracts on designated contract markets.

In short, the court saw a serious federal preemption question that justified temporary relief before the Aug. 1 effective date.

What does the preliminary injunction allow Kalshi and Polymarket US to do?

The order allows Kalshi and Polymarket US to continue operating in Minnesota while the court considers their challenge to the state law.

Minnesota’s statute would prohibit the creation, operation and advertising of prediction markets. It would also impose criminal penalties for supporting them. The injunction keeps those enforcement risks from landing on the CFTC-regulated platforms during this early stage of the case.

The court said a preliminary injunction was appropriate to maintain the status quo until the merits can be fully resolved.

Could the injunction still be narrowed later?

Yes. The judge cautioned that the injunction could eventually be narrowed because the plaintiffs had not shown that every event contract listed by Kalshi and Polymarket US met the legal definition of a swap.

That caveat is important. The temporary win does not mean every product on either platform is permanently shielded under federal law. It means the state cannot enforce the new ban against the plaintiffs for now, while the court sorts out how far preemption reaches.

What happens next for Minnesota prediction markets?

Litigation will continue on the merits of the challenge. Platforms can keep serving Minnesota users under the current injunction, but the scope of protection may change if the court later distinguishes among contract types.

For now, the headline is clear: a federal judge has paused Minnesota’s prediction market ban for Kalshi and Polymarket US, putting federal commodities jurisdiction at the center of the fight.