Kalshi, Polymarket win pause against Minnesota's prediction market ban

Summary

A federal judge in Minnesota has granted a preliminary injunction blocking the enforcement of the state’s law that bans prediction markets, siding with Kalshi, Polymarket, and the Commodity Futures Trading Commission (CFTC). Judge Katherine Menendez of the U.S. District Court for the District of Minnesota ruled that the Minnesota statute likely conflicts with the federal Commodity Exchange Act (CEA) by criminalizing activities that fall under the CFTC’s jurisdiction. The judge found that these parties are likely to succeed in proving that the state law is preempted by federal regulation during a full trial.

Kalshi and Polymarket, two prediction market operators, along with the CFTC, had challenged the Minnesota law earlier in 2026 after it was passed, arguing that the CFTC has exclusive authority over “swaps,” which includes most event contracts traded on prediction markets. Judge Menendez agreed that the CFTC has jurisdiction over these contracts and that the state law cannot override federal regulation in this area. The ruling specifically noted that many trades on Kalshi’s and Polymarket’s platforms qualify as “swaps” under the CEA, making the Minnesota statute subject to express federal preemption.

Why it matters

While the judge acknowledged that some contracts, such as those predicting outcomes from entertainment shows like “Love Island,” might fall outside the federal framework, targeting the injunction narrowly to exclude those would be difficult. The court also emphasized that not halting the Minnesota law would cause irreparable harm to the prediction market firms involved. Consequently, the injunction will remain in effect until a final ruling on the case’s merits is reached, thereby allowing Kalshi and Polymarket to continue operating in Minnesota for the time being.