Federal Judge Blocks Minnesota Prediction Market Ban in Win for Kalshi, Polymarket

• U.S. District Judge Katherine Menendez issued a preliminary injunction on July 27 blocking Minnesota’s prediction market ban.
• The ruling favors Kalshi, Polymarket US and the CFTC, finding the state law likely preempted by the Commodity Exchange Act.
• Minnesota’s statute, signed by Gov. Tim Walz, was set to criminalize operating or advertising prediction markets starting Aug. 1.

A federal judge has temporarily blocked Minnesota from enforcing its first-in-the-nation ban on prediction markets, handing a significant early victory to Kalshi, Polymarket US and the Commodity Futures Trading Commission just days before the law was due to take effect.

In an order dated July 27, U.S. District Judge Katherine Menendez of the District of Minnesota granted the preliminary injunction sought jointly by the CFTC, Kalshi and Polymarket. The decision pauses enforcement of the state statute while the underlying lawsuit proceeds to a full hearing on the merits.

Minnesota’s law, signed by Gov. Tim Walz in May as part of a broader public-safety package, would have made it a felony to create, operate, host or advertise prediction markets offering contracts on sports, weather, elections, popular culture, war or other events. The measure was scheduled to become effective Aug. 1.

“It appears likely that the Minnesota law will regulate transactions over which the CFTC has ‘exclusive jurisdiction,’” Menendez wrote, according to the court order. The judge concluded the plaintiffs are likely to succeed on their express-preemption claims under the Commodity Exchange Act for event contracts that qualify as swaps traded on designated contract markets.

The CFTC had described the Minnesota statute as “the most aggressive move by any state to shut down CFTC-regulated markets and undermine the federal regulatory framework Congress established more than 50 years ago.” Both Kalshi and Polymarket operate as CFTC-registered designated contract markets and argue that state gambling laws cannot override federal derivatives jurisdiction.

The injunction preserves the status quo for users and platforms in Minnesota. Similar jurisdictional conflicts continue in other states, underscoring the broader tension between federal oversight of event contracts and state-level gambling regulation.

The Minnesota ruling lands amid rising scrutiny of sports-related prediction markets. On the same day, the NFL urged CFTC Chair Michael Selig to tighten proposed rules governing sports event contracts, citing risks to game integrity and the need for stronger consumer protections.