Kalshi, Polymarket Score Court Win as Judge Blocks Minnesota Ban

A U.S. federal judge has issued a preliminary injunction preventing Minnesota from enforcing a new law that would have made it the first state in the country to ban prediction market operators such as Polymarket and Kalshi. The ruling keeps the platforms operational in Minnesota while the legal dispute moves forward.

U.S. District Judge Katherine Menendez concluded that federal law likely preempts the Minnesota statute, suggesting that the Commodity Exchange Act and the authority of the U.S. Commodity Futures Trading Commission (CFTC) take precedence over the state’s attempt to regulate federally supervised prediction markets.

The injunction follows a lawsuit filed by Polymarket, Kalshi, and the CFTC after Minnesota Governor Tim Walz signed the legislation into law in May. The measure, scheduled to take effect on August 1, would have made it a criminal offense to operate, host, or promote prediction markets within the state. 

Minnesota Attorney General Keith Ellison has argued that prediction markets function as gambling and should remain subject to state regulation. Kalshi and Polymarket, however, contend that their event contracts are federally regulated financial derivatives overseen by the CFTC, placing them outside the reach of state gambling laws. 

The preliminary injunction does not resolve the underlying legal dispute. Instead, it preserves the status quo while the federal court considers whether Minnesota’s law is preempted by federal regulation. The outcome could have broader implications for how prediction markets are regulated across the United States, particularly as several other states pursue legal action against similar platforms.

Source: Reuters