A federal judge issued a temporary order preventing Minnesota from enforcing its ban on prediction markets, allowing platforms like Kalshi and Polymarket to continue operations for now. The ruling came less than a month before the state’s August 1 deadline to impose the restrictions.
This decision is significant because both Kalshi and Polymarket rely heavily on cryptocurrency-based settlements, with Polymarket using stablecoins for onchain margin settlements. Digital asset contracts account for a substantial share of trading volume on these platforms approximately 20% at Polymarket and 7% at Kalshi since mid-2024 making the state’s ban a threat to a growing crypto market niche.
The case highlights a broader legal battle over whether prediction markets fall under federal derivatives regulations or state gambling laws. The outcome could reshape how these platforms operate across the US, especially given the rise of crypto-native trading features like Polymarket’s new USDC-backed token and its upgraded central limit order book system.
The Minnesota lawsuit and court order also arrive amid ongoing regulatory scrutiny of prediction markets, including tightened self-certification rules from the CFTC. This reflects the challenge regulators face in categorizing prediction markets that increasingly integrate digital assets.
With the ban on hold, Kalshi and Polymarket can maintain their rapid growth and continue offering contracts tied to crypto events, politics, and sports. The temporary injunction buys time for a deeper legal resolution but leaves the future regulatory landscape uncertain.
