US Court Blocks Minnesota Prediction-Market Ban in Win for Kalshi, Polymarket

A US court has blocked Minnesota’s ban on prediction markets, siding with Kalshi and Polymarket in their bid to halt enforcement.

CoinDesk reported on July 27 that US District Judge Katherine Menendez in Minnesota found the state law was likely preempted by the federal Commodity Exchange Act, or CEA. She granted a preliminary injunction sought by Kalshi, Polymarket and the Commodity Futures Trading Commission.

Menendez wrote that the plaintiffs had sufficiently shown they were likely to succeed on the merits of their claim that Minnesota law is preempted by the CEA. The central issue, she said, is whether the state can regulate trading in event contracts that qualify as swaps under the federal law.

Kalshi, Polymarket and the CFTC sued after Minnesota earlier this year enacted a law that made operating prediction markets a criminal offense. They argued that because the event contracts are structured as swaps under the CFTC’s jurisdiction, state regulation intrudes on federal authority.

The court said some event contracts could still be subject to state law. Menendez cited contracts tied to predicting the winner of a television program as an example, but found it impractical to exclude only those contracts from the injunction.

The court also found that Kalshi and Polymarket could suffer irreparable harm if enforcement is allowed to proceed.

The injunction will remain in effect until the court rules on the merits of Minnesota’s prediction-market regulations.