Judge Blocks Minnesota Ban on Prediction Markets

A federal judge issued a preliminary injunction on Monday that blocks Minnesota from enforcing a new law against prediction markets. The decision comes just before the August 1 start date for the legislation, which would have made operating or creating these markets a felony. The ruling protects platforms like Kalshi and Polymarket while the legal battle continues.

US District Judge Katherine Menendez determined that the Commodity Exchange Act likely takes priority over the state law. Because these platforms are registered with the Commodity Futures Trading Commission, the court found that the federal government holds exclusive jurisdiction over the swaps traded on them. The state law was broad enough to criminalize everything from election betting to weather hedging contracts used by farmers.

The judge noted that while the state law is frozen for now, some smaller event contracts might not fall under the strict definition of a swap. Since both sides presented the case as an all or nothing issue, the court chose to halt the entire statute to prevent irreparable harm to users who have millions of dollars in open positions.

Looking ahead, the court has yet to rule on First Amendment arguments raised by the exchanges. While this injunction provides immediate relief for prediction market operators, a final decision on the merits of the case will determine the long term future of state level regulation for these services.