A federal judge has stopped Minnesota from becoming the first state to outlaw prediction markets, preserving access to platforms such as Kalshi and Polymarket while a broader fight over regulatory power moves forward.
U.S. District Judge Katherine Menendez issued a preliminary injunction on July 28, two days before Minnesota’s law was scheduled to take effect on August 1. The statute would have prohibited a wide range of prediction-market activity, including contracts tied to sports, elections, weather and government actions.
The case puts state gambling authority directly against federal commodities regulation. The Commodity Futures Trading Commission, joined by Kalshi and Polymarket, argues that federal law gives the CFTC exclusive jurisdiction over the event contracts offered by the companies. Minnesota Attorney General Keith Ellison counters that prediction markets are gambling products that states have traditionally regulated to protect residents from addiction and consumer harm.
- ⚖️ The injunction keeps the Minnesota ban from being enforced during the litigation.
- 📱 Residents can continue using covered prediction-market platforms for now.
- 🏛️ The dispute could determine whether states may restrict federally regulated event contracts.
The ruling is significant beyond Minnesota because other states are pursuing sharply different approaches. New York recently won a ruling allowing it to enforce gambling laws against Kalshi’s sports contracts, while Washington obtained a preliminary injunction blocking certain Kalshi offerings. The conflicting decisions increase pressure for a higher court to clarify where federal financial regulation ends and state gambling authority begins.
For users, the immediate result is simple: Minnesota’s planned shutdown did not happen. For regulators and operators, the ruling leaves a rapidly expanding market in legal limbo, with billions of dollars and the future classification of event-based trading at stake.