Judge blocks Minnesota prediction market ban

A federal judge has blocked Minnesota from enforcing the nation's first state-level felony ban on prediction markets, handing a significant legal victory to the platforms Kalshi and Polymarket, as well as the federal Commodity Futures Trading Commission (CFTC). Judge Katherine Menendez of the U.S. District Court for the District of Minnesota issued a preliminary injunction on July 27, just days before the law was scheduled to take effect on August 1.

The injunction halts the law while a lawsuit, filed earlier this year, proceeds. The CFTC, alongside Kalshi and Polymarket, sued the state after Governor Tim Walz signed the ban into law on May 18. They argued that the statute, which treated prediction market operations as illegal gambling punishable by up to five years in prison and fines, is preempted by federal law.

In her 44-page ruling, Judge Menendez found the plaintiffs had demonstrated a strong likelihood of succeeding on the merits of their claim. She wrote that the federal Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps, a category of futures contracts that includes the event contracts offered on these platforms. The court concluded that Minnesota's...