Minnesota prediction market ban blocked by federal judge before Aug. 1
A federal judge paused Minnesota’s prediction market ban after the CFTC, DOJ, Kalshi and Polymarket US challenged the law.
By Deshawn Carter · Sports Writer
3 min read
A federal judge put the Minnesota prediction market ban on hold Monday, stopping the state from enforcing the new law just days before it was set to begin on Aug. 1.
U.S. District Judge Katherine Menendez granted a preliminary injunction after lawsuits from the Justice Department, the Commodity Futures Trading Commission, Kalshi and Polymarket US challenged the measure. In her order, Menendez said the plaintiffs had shown they were likely to succeed, at least partly, on their argument that federal law overrides the Minnesota statute.
The judge also found that the plaintiffs faced a threat of irreparable harm if the ban took effect. For now, the order bars Minnesota from enforcing the law against entities registered with the CFTC as designated contract markets.
Why was the Minnesota prediction market ban blocked?
The challengers argued that the CFTC has exclusive federal authority over the event contracts traded on federally registered exchanges. Prediction markets in this fight center on those event contracts, which are traded through exchanges overseen by the federal commodities regulator.
Menendez wrote in a footnote that the Minnesota law may not be preempted in every possible use, but said it was likely preempted “in many respects.” She said pausing enforcement would keep the current situation in place while the court develops the legal issues further.
The ruling followed pressure from the CFTC, which told the court in a Monday letter that it planned to take its motion to an appellate court if it did not receive a response by the next day. The regulator had previously asked the court for a decision by July 17.
The court did not rule by that date, though it had acknowledged during a July 2 hearing that a quick decision was needed.
What did Kalshi and Polymarket argue?
Kalshi and Polymarket said Minnesota’s law would harm their businesses in ways that could not be fixed later with money damages. Polymarket argued that the ban would interfere with what it described as a nationally uniform market.
Polymarket also argued that the law would violate its First Amendment right to advertise. Menendez’s order did not resolve the full case, but it stops the state from enforcing the challenged law while the litigation continues.
Minnesota’s law did not punish residents for using prediction markets, according to NBC News. Instead, it targeted companies by blocking them from operating in the state.
How did Minnesota defend the law?
Minnesota placed the prediction market ban inside a broader public safety bill and treated the markets as gambling. State Rep. Emily Greenman told NBC News that gambling has long been regulated by states as a public health and safety issue.
The Minnesota fight is part of a wider clash between state gambling rules and federally regulated prediction market platforms. Arizona filed criminal charges against Kalshi in March as part of an effort to stop transactions that resemble sports betting.
Nevada’s state court extended a temporary ban on Kalshi in that state. Utah, where gambling is illegal, recently banned proposition betting, a move that applies to prediction markets.
The Minnesota order gives Kalshi, Polymarket US and federally registered exchanges a temporary win, but the broader question of how far states can go in restricting prediction markets remains in court.
This story draws on original reporting from NBC News.