Kalshi, Polymarket win pause against Minnesota's prediction market ban
A U.S. federal judge has issued a preliminary injunction blocking Minnesota from enforcing a law that bans prediction markets. The court indicated that the state law is likely preempted by federal jurisdiction over commodities and swaps.
Why it matters
This ruling provides a significant legal victory for prediction market platforms like Kalshi and Polymarket, clarifying the boundaries between state regulation and federal oversight of financial derivatives.
Judge Katherine Menendez, of the U.S. District Court for the District of Minnesota, ruled Monday that Minnesota’s recently passed law that would ban prediction market operators from offering their products in the state seems to be preempted by the federal CEA, and that the companies and federal regulator “are likely to succeed” in showing so after a full trial.
Kalshi, Polymarket and the CFTC sued Minnesota earlier this year after the state passed the law criminalizing the operation of prediction markets, arguing that the statute violated the CFTC’s jurisdiction to oversee “swaps,” which prediction market contracts are structured as.
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