Judge blocks Minnesota from enforcing prediction market ban in win for Kalshi, Polymarket

A federal judge blocked Minnesota from enforcing its new law banning prediction markets, allowing Kalshi and Polymarket to continue operating in the state while litigation proceeds.

U.S. District Judge Katherine Menendez granted the motion for a preliminary injunction on Monday under the request of the Commodity Futures Trading Commission, Kalshi, and Polymarket.

Minnesota lawmakers passed the law earlier this year, prohibiting the creation, operation and advertising of prediction markets in the state. The law is scheduled to take effect on Aug. 1. 

The CFTC, Kalshi and Polymarket filed suit against the state in May, arguing that Minnesota is unlawfully attempting to regulate federally overseen derivatives markets that fall under the CFTC's "exclusive jurisdiction" under the federal Commodity Exchange Act (CEA).

In the Monday ruling, the judge wrote that Minnesota's prediction market statute is "likely at least partially preempted by the CEA because the CFTC has been given exclusive jurisdiction over transactions involving swaps traded on DCMs."

"A preliminary injunction prohibiting Defendants from enforcing Minnesota's prediction market statute strikes the right balance of harms while preserving the status quo," the judge said.

The Block has reached out to Kalshi and Polymarket for comment.

Nationwide legal battle

Kalshi has been battling state regulators over its sports-event contracts. While the Monday ruling in Minnesota marks a win for prediction markets, a federal judge in New York once again declined to block the state from enforcing its gambling laws against Kalshi.

On Monday, Southern District of New York Judge Analisa Torres denied Kalshi's motion for an emergency injunction pending appeal. Earlier this month, Torres also denied the company's request for a preliminary injunction.

Last month, a Michigan judge issued a temporary restraining order against Kalshi, blocking the platform from offering sports-related event contracts in the state. Last week, a Washington court granted a request to temporarily block Kalshi from offering sports-related event contracts in the state, saying it operates illegal gambling activities under state law.

Kalshi and Polymarket remain the dominant prediction market platforms in the world in trading volume. Kalshi's monthly volume reached $33 billion in June, while Polymarket and its U.S. platform saw a combined $13.95 billion, according to The Block's data dashboard.

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