TheBlock
A federal judge issued a preliminary injunction on Monday blocking Minnesota from enforcing its new law banning prediction markets, delivering a win for Kalshi and Polymarket in their challenge to state-level restrictions on the sector.
Minnesota's statute, passed earlier this year, prohibited the creation, operation and advertising of prediction markets in the state. The judge ruled the law is "likely at least partially preempted by the CEA," the federal Commodity Exchange Act that already gives the CFTC jurisdiction over event-contract venues.
Why it matters
The ruling is the cleanest articulation yet that prediction markets sit under federal derivatives oversight, not state gaming or gambling law. If it holds, it sharply narrows the playbook other states have been pursuing to sideline Kalshi and Polymarket, and pushes the regulatory fight squarely onto CFTC turf.
Market impact
For Kalshi and Polymarket, the injunction restores operating runway in Minnesota ahead of any merits ruling and signals to litigants in similar state fights that the preemption argument travels. Expect copycat challenges in other jurisdictions, and watch for the CFTC to harden its own framework as the de facto national rule-setter for event contracts.
Frequently asked questions
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What did the federal judge rule on Minnesota's prediction market ban?
The judge issued a preliminary injunction blocking Minnesota from enforcing its new law banning prediction markets, ruling the state statute is "likely at least partially preempted by the CEA," the federal Commodity Exchange Act.
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Which companies brought the challenge against Minnesota?
Kalshi and Polymarket, two of the largest US-accessible prediction market venues, challenged the Minnesota law and won the preliminary injunction.
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Why does the Commodity Exchange Act matter here?
The CEA gives the CFTC jurisdiction over event-contract and derivatives venues. The judge's ruling signals that federal derivatives law preempts state attempts to ban or restrict prediction markets, rather than relegating them to state gaming or gambling regulation.
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What does this ruling mean for other states weighing prediction market bans?
It narrows the legal playbook for any state seeking to sideline Kalshi or Polymarket, and makes the preemption argument available to copycat challenges elsewhere. The regulatory fight shifts toward the CFTC as the de facto national rule-setter.
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Is the Minnesota prediction market ban now permanently dead?
No. This is a preliminary injunction, meaning the court found the challengers likely to succeed on the merits for now. The underlying case still has to proceed, and other states could attempt narrower restrictions that survive preemption review.
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