A US federal judge has temporarily blocked Minnesota’s proposed ban on prediction markets, allowing Kalshi and Polymarket US to continue operating in the state while a legal challenge moves forward.
In a July 27 ruling, US District Judge Katherine Menendez granted preliminary injunctions in favor of the two platforms, finding they were likely to succeed on key arguments that the Commodity Exchange Act (CEA) overrides Minnesota’s new law in certain areas.
The court determined that several event contracts offered by Kalshi and Polymarket US appear to qualify as swaps, placing them under the exclusive regulatory authority of the Commodity Futures Trading Commission (CFTC) when traded on designated contract markets.
Minnesota’s legislation, which was set to take effect on August 1, would prohibit the creation, operation and promotion of prediction markets within the state while introducing criminal penalties for businesses and individuals supporting such platforms.
The preliminary injunction prevents the state from enforcing the law against Kalshi and Polymarket US for now, allowing both platforms to continue serving Minnesota users until the case is fully resolved.
However, Judge Menendez noted that the injunction could be narrowed later in the proceedings, as the plaintiffs have not yet demonstrated that every event contract offered by the platforms qualifies as a swap under federal law.
The ruling preserves the current regulatory landscape while the court determines whether federal commodities law preempts Minnesota’s attempt to restrict prediction markets, a case that could have broader implications for the future regulation of event-based trading platforms across the United States.
