TLDR
- US District Judge Katherine Menendez granted a preliminary injunction halting Minnesota’s prediction market prohibition
- The order protects CFTC-regulated operators Kalshi and Polymarket US
- The court determined Minnesota’s statute likely violates the federal Commodity Exchange Act
- The Commodity Futures Trading Commission joined as a co-plaintiff in the litigation
- The temporary order remains effective pending final judgment
Minnesota’s attempt to prohibit prediction markets has been temporarily halted by a federal court, allowing platforms like Kalshi and Polymarket US to maintain operations in the state as legal proceedings continue.
Kalshi and Polymarket Gain Temporary Legal Win as Court Blocks Minnesota Ban
Reuters reported that a U.S. federal judge has blocked Minnesota from enforcing a new law that would have become the first state law in the country to directly ban prediction markets such as Kalshi and… pic.twitter.com/5EogYw9RHg
— Wu Blockchain (@WuBlockchain) July 27, 2026
The preliminary injunction was granted Monday by US District Judge Katherine Menendez, who determined that federal commodities law likely supersedes Minnesota’s regulatory attempt.
Background of the Legal Challenge
The Minnesota legislature enacted legislation that would prohibit the establishment, management, and promotion of prediction market platforms within state borders. The statute was scheduled to become enforceable this Saturday, with potential criminal consequences for violations.
Following passage of the law, Kalshi, Polymarket US, and the CFTC initiated legal action against Minnesota. Their central argument asserted that state authorities lack jurisdiction over these financial instruments because prediction market agreements are classified as “swaps,” placing them under exclusive federal oversight.
Judge Menendez found this argument persuasive on a preliminary basis. Her analysis concluded the plaintiffs demonstrated a strong likelihood of proving federal statutes preempt the state prohibition.
According to the decision, refusing the injunction would inflict “irreparable harm” on the prediction market operators.
Key Points from the Court’s Decision
The judge’s opinion emphasized that prediction market instruments qualifying as swaps come under the CFTC’s sole regulatory authority. Since the federal agency oversees designated contract markets, individual states cannot implement conflicting regulations targeting identical financial products.
However, she included an important qualification. Not all contracts available on these platforms necessarily meet the legal criteria for swaps. She cited wagers on reality television outcomes, such as “Love Island” winners, as potential examples of agreements that might fall outside the statutory definition.
Nevertheless, she concluded that creating a limited injunction addressing only these exceptional scenarios would prove impractical at this stage of litigation.
The injunction applies to both platforms and preserves current operations pending a comprehensive trial on the underlying issues.
The CFTC’s participation as a plaintiff significantly strengthened the legal challenge. The federal agency’s direct involvement demonstrated its commitment to protecting its regulatory authority over prediction markets across the nation.
The outcome of this litigation may establish important legal precedent influencing how states nationwide address prediction market oversight in the future.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
