Federal judge halts Minnesota's historic ban on prediction-market platforms

In a Monday decision, U.S. District Judge Katherine Menendez blocked Minnesota from implementing its newly enacted prohibition on prediction-market operators. The injunction came at the request of Kalshi, Polymarket and the Commodity Futures Trading Commission, which argued that the state law is preempted by federal regulations governing swaps. Minnesota’s measure, signed by Governor Tim Walz, would have criminalized the hosting, operation, or promotion of prediction markets within the state.

Menendez noted that numerous event contracts on the two platforms meet the legal definition of a swap, a category the CFTC exclusively regulates. While she left open the possibility of a more limited order if some contracts fall outside that definition, she deemed a broad preliminary injunction appropriate given the law’s imminent start date. The ruling pauses the ban until the courts can fully resolve the preemption dispute, preserving the ability of the platforms to continue operating in Minnesota for now.