On July 27, U.S. District Judge Katherine Menendez issued a preliminary injunction halting Minnesota’s new law banning certain prediction markets, including Kalshi and Polymarket, from taking effect. The law, which was set to start on August 1, would have classified prediction market operations as felonies, targeting businesses, data providers, payment processors, and advertisements linked to these platforms.
Judge Menendez's injunction prevents Minnesota from enforcing the statute against Commodity Futures Trading Commission (CFTC) registered designated contract markets while legal challenges proceed. The court acknowledged that many contracts offered by these platforms likely fall under the Commodity Exchange Act as swaps, giving the CFTC exclusive regulatory control over a significant portion of these products.
However, the ruling leaves unresolved whether every event contract qualifies under federal law, meaning Minnesota’s law could still apply to some products if a permanent injunction isn’t granted. Minnesota Attorney General Keith Ellison called the markets simple gambling, maintaining the state's stance despite the setback. Kalshi countered by emphasizing federal jurisdiction limits states from banning these platforms.
Implications for Prediction Markets and State Gambling Laws
The injunction solely shields CFTC-registered markets under the new statute. Minnesota’s existing gambling laws may still apply to individual sports or entertainment contracts, although the state has not clarified if further enforcement will target platforms under those provisions. Kalshi and Polymarket continue operating for now, but the ongoing court cases will shape whether state legislators can impose such outright bans in the future.
This is informational content and not financial advice.
