US judge temporarily blocks Minnesota prediction market ban

A US federal judge has temporarily blocked Minnesota from enforcing its new prediction market ban against CFTC-regulated platforms Kalshi and Polymarket US.

According to a Monday court order granting the plaintiffs’ motions for preliminary injunctions, US District Judge Katherine Menendez found that the plaintiffs were likely to succeed, at least in part, on claims that the Commodity Exchange Act preempts the Minnesota statute.

The judge said several event contracts offered by the platforms appeared to qualify as swaps, giving the CFTC exclusive jurisdiction over transactions involving those contracts on designated contract markets. 

Minnesota’s law, which is scheduled to take effect Saturday, would prohibit the creation, operation and advertising of prediction markets and impose criminal penalties for supporting them.

The preliminary injunction allows the platforms to continue operating in the state while litigation proceeds. 

Still, the judge cautioned that the injunction could eventually be narrowed because the plaintiffs had not shown that every event contract listed by Kalshi and Polymarket US met the legal definition of a swap. 

The order said a preliminary injunction was appropriate to maintain the status quo until the merits of the case could be fully resolved.

Related: Prediction markets legal battles heat up in Minnesota, Rhode Island