Federal judge halts Minnesota's prediction market ban
Regulation & Gov ·
A preliminary injunction from a U.S. District Court has stopped Minnesota from enforcing what would have been the first state law directly outlawing prediction markets like Kalshi and Polymarket.
U.S. District Judge Katherine Menendez granted the injunction after concluding that federal law likely preempts the state statute, according to Reuters via WuBlockchain. The measure at issue, signed by Minnesota Governor Tim Walz in May, would have made it a crime to operate, host, or promote prediction markets within the state, and its blocking marks a temporary but notable legal setback for state-level efforts to restrict the sector, as detailed by Decrypt.
The case reached the court after Kalshi, Polymarket, and the CFTC jointly filed suit challenging the law, a coalition that underscores how the federal regulator itself argued the state measure conflicted with existing oversight of these markets. Coverage from CoinDesk frames the ruling as a pause rather than a final resolution, leaving the underlying legal dispute still open.
Part of the court's reasoning turned on how contracts are classified under federal commodities law: not every prediction market contract necessarily qualifies as a swap, a distinction that bears on whether state or federal rules govern them, as noted in reporting from The Block. That question of contract classification is likely to remain central as the litigation proceeds beyond the preliminary stage.
Four distinct outlets have now corroborated the injunction and its preemption rationale, reflecting broad attention to a case that could shape how other states approach similar prediction market restrictions. What remains unresolved is whether the preliminary injunction will hold through a full trial, and whether Minnesota will pursue further legal or legislative action to revive its ban. The classification question over which contracts count as swaps under federal law also appears unsettled, leaving room for further rulings that could affect Kalshi, Polymarket, and other platforms operating across state lines.