US District Judge Katherine Menendez stepped in to block Minnesota's new ban on prediction markets before it could take effect this Saturday, issuing a preliminary injunction on Monday. The law, part of a public safety package, would have prohibited the creation, operation, and advertising of prediction markets within the state, imposing criminal penalties for violations. Kalshi and Polymarket US, both regulated by the Commodity Futures Trading Commission (CFTC), were set to be impacted but can now continue their operations in Minnesota while the case moves forward.
Judge Menendez ruled that the state law likely clashes with federal law, specifically the Commodity Exchange Act, which grants the CFTC exclusive authority over swaps. The CFTC joined the lawsuit alongside Kalshi and Polymarket US, signaling a stronger federal defense of its regulatory jurisdiction over these markets nationwide. The judge expressed that the plaintiffs showed a good chance of success and demonstrated potential irreparable harm if the ban went into force as planned.
The Minnesota legislation is notably strict, treating prediction markets like gambling with associated public health and safety concerns, as State Rep. Emily Greenman stated. Yet the federal court found that federal preemption could invalidate such a state-level blanket ban. The ruling is preliminary; a full trial will be necessary to resolve the matter definitively.
Market reaction was muted on the news, with little immediate impact on Kalshi or Polymarket US trading volumes.
This information is provided for informational purposes only and does not constitute financial advice.
