Court Blocks Minnesota Prediction Market Ban in Win for Kalshi, Polymarket
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A federal judge has blocked Minnesota’s attempt to outlaw prediction markets, handing a preliminary win to Kalshi, Polymarket and the CFTC while their lawsuit against the state plays out.
Kalshi and Polymarket have won a preliminary injunction against Minnesota’s prediction market ban, after a federal judge found the state law likely conflicts with U.S. commodities regulation.
Judge Katherine Menendez of the U.S. District Court for the District of Minnesota ruled on Monday that the recently passed state law banning prediction market operators is probably preempted by the federal Commodity Exchange Act. Her decision pauses enforcement of the ban while the underlying case continues.
Kalshi, Polymarket and the Commodity Futures Trading Commission had jointly sued Minnesota earlier this year after lawmakers criminalized the operation of prediction markets in the state. The companies argued the law overstepped into territory reserved for federal regulators, since prediction market contracts are structured as “swaps” under the CFTC’s jurisdiction.
In her ruling, Judge Menendez agreed that the plaintiffs are likely to succeed on the merits of their case. She wrote that the dispute largely comes down to whether Minnesota’s statute tries to regulate trades that qualify as swaps under federal law, and found that, for most contracts listed on Kalshi and Polymarket US, it does.
Not every contract may be shielded, however. The judge pointed to niche predictions, such as bets on reality TV shows like “Love Island,” as examples that might still fall within the state’s reach. But she noted it would be impractical to carve the injunction narrowly enough to target only those edge cases.
The court also found that allowing Minnesota’s prediction market ban to stand while the case proceeds would cause “irreparable harm” to Kalshi and Polymarket. The injunction will remain in place until a final ruling is reached on the merits.
This case adds to a growing list of state-level battles over prediction markets, as regulators across the U.S. wrestle with how to classify and oversee the fast-growing industry.
