A federal judge granted a preliminary injunction blocking Minnesota's prediction market ban, ruling it's likely preempted by federal law, days before the Aug. 1 deadline.
A federal judge has stopped Minnesota from enforcing a new law that would have made the state the first in the country to explicitly ban prediction markets. US District Judge Katherine Menendez granted a preliminary injunction on July 27, four days before the law was set to take effect on August 1.
The law, passed by Minnesota's legislature earlier in 2026, barred the creation, operation, and advertising of prediction markets within the state. The Commodity Futures Trading Commission (CFTC), Kalshi, and Polymarket had filed suit against Minnesota in May, arguing the law crossed into territory already governed by federal law.
The Federal Preemption Question
At the center of the case is the federal Commodity Exchange Act (CEA), which gives the CFTC exclusive authority over derivatives markets, including swaps traded on designated contract markets. The plaintiffs argued Minnesota could not regulate contracts that fall under that federal framework.
Judge Menendez agreed, writing in her ruling that Minnesota's prediction market statute is "likely at least partially preempted by the CEA because the CFTC has been given exclusive jurisdiction over transactions involving swaps traded on DCMs." She added that the injunction "strikes the right balance of harms while preserving the status quo." Kalshi and Polymarket are free to continue operating in Minnesota while the case moves forward.
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Kalshi Faces Rulings in Other States
The Minnesota outcome did not resolve Kalshi's legal disputes elsewhere. On the same day Judge Menendez issued the injunction, Southern District of New York Judge Analisa Torres denied Kalshi's request for an emergency injunction pending appeal. Torres had also denied a separate preliminary injunction request earlier in July. New York's gambling laws continue to apply to Kalshi's sports event contracts in that state.
Michigan and Washington issued similar orders. A Michigan judge issued a temporary restraining order in June, blocking the platform from offering sports-related event contracts there. A Washington court issued its own temporary block the week before the Minnesota ruling, finding the contracts constituted illegal gambling under state law.
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