Federal Judge Blocks Minnesota Ban on Prediction Markets Ahead of Implementation
A federal judge on Monday granted a preliminary injunction halting a Minnesota state law that would have banned prediction markets days before it was set to go into effect on Saturday. U.S. District Judge Kate M. Menendez of the District of Minnesota sided with the Commodity Futures Trading Commission alongside prediction platforms Kalshi and Polymarket, ruling that the companies faced a threat of irreparable harm and keeping the law on hold pending a final court ruling.
In May, Minnesota became the first state to pass legislation making it a felony for most prediction markets to operate and advertise locally. The legal challenge argued that the platforms can be regulated solely at the federal level. Kalshi disclosed in court documents that it had amassed over 90,000 users in Minnesota by the end of May, with participants spending millions of dollars on trades spanning sporting events, reality television, and other outcomes.
National Jurisdictional Battles Intensify Between States and Federal Regulators
The conflict in Minnesota mirrors broader national disputes, as more than a dozen states have attempted to enforce existing anti-gambling laws to restrict prediction market trading. While the Commodity Futures Trading Commission has actively sued to block these state enforcement efforts under the principle that federal regulations pre-empt state authority, outcomes across the country have varied. States like New York and Washington have successfully defeated the agency’s challenges, whereas the federal regulator secured a temporary restraining order in April from an Arizona judge to stop a state criminal case against Kalshi.
Political Scrutiny and High-Level Support Surround the Regulatory Agency
The Commodity Futures Trading Commission has faced public criticism regarding its handling of platforms tied to the Trump family. Donald Trump Jr. serves as an advisor to both Kalshi and Polymarket while also providing financial backing to Polymarket. Furthermore, President Trump stated on Truth Social that the federal agency holds exclusive authority over prediction markets rather than individual states. Following Monday’s court decision, agency chairman Michael S. Selig issued a social media statement acknowledging and appreciating the Minnesota court’s careful consideration.
State Officials Vow to Defend Public Health and Safety Laws in Court
Minnesota lawmakers and state officials maintain that prohibiting prediction markets is vital for public protection in a state where sports betting remains illegal. Emphasizing that the platforms constitute gambling, Minnesota Attorney General Keith Ellison stated via email that the state possesses every right to keep predatory gambling out of local communities and confirmed that the state will continue defending the legislation in court. Meanwhile, industry representatives praised the judicial pause, with Kalshi spokeswoman Elisabeth Diana asserting that states cannot ban activities outside their jurisdiction and Polymarket chief legal officer Neal Kumar expressing eagerness to continue operations in the state.
