US judge temporarily blocks Minnesota prediction market ban The preliminary injunction allows Kalshi and Polymarket US to continue operating in Minnesota while the court considers their challenge to the state law.

A U.S. federal judge has issued a preliminary injunction temporarily blocking Minnesota from enforcing its newly passed prediction market ban against two CFTC-regulated platforms, Kalshi and Polymarket US. The order, issued on July 27 by U.S. District Judge Katherine Menendez, allows these platforms to keep operating in Minnesota while the court reviews their challenge to the state statute. The ban was scheduled to take effect on August 1 and would have prohibited creation, operation, advertising, and support of prediction markets under threat of criminal penalties.

Judge Menendez found that the plaintiffs were likely to succeed, at least in part, on the argument that the Commodity Exchange Act (CEA) preempts Minnesota’s law. She noted that several event contracts offered by Kalshi and Polymarket appear to qualify as swaps, a category of financial instruments subject exclusively to the Commodity Futures Trading Commission’s (CFTC) jurisdiction on designated contract markets. This federal jurisdiction potentially overrides Minnesota’s ban on prediction markets.

However, the judge also cautioned that the injunction might be narrowed later since the platforms had not demonstrated that every event contract they offer fits the legal definition of a swap. The preliminary injunction was described as necessary to maintain the status quo pending a fuller consideration of the case’s merits. This legal battle reflects ongoing tensions between some states seeking to regulate or ban prediction markets and federally regulated platforms operating under the CEA and CFTC oversight.