Federal Court Issues Temporary Halt to Minnesota's Ban on Prediction Markets
A preliminary injunction has been granted enabling Kalshi and Polymarket US to maintain their Minnesota operations as the court evaluates their legal challenge against the state's restrictive legislation.
A federal judge in the United States has issued a temporary prohibition preventing Minnesota from implementing its recently enacted ban on prediction markets against platforms regulated by the CFTC, specifically Kalshi and Polymarket US.
Based on a court order dated July 27 that approved the plaintiffs' requests for preliminary injunctions, US District Judge Katherine Menendez determined that the plaintiffs demonstrated a strong likelihood of prevailing, at minimum partially, on their arguments that the Commodity Exchange Act supersedes Minnesota's statute.
The judge indicated that multiple event contracts provided by these platforms seemed to meet the criteria for classification as swaps, thereby granting the CFTC sole jurisdiction over transactions conducted with those contracts on designated contract markets.
The Minnesota legislation, which had been set to become effective on Aug. 1, would have banned the establishment, operation and promotion of prediction markets while imposing criminal sanctions on those who facilitate them.
The preliminary injunction permits these platforms to maintain their operations within the state as the legal proceedings move forward.
Nevertheless, the judge issued a warning that the scope of the injunction might ultimately be reduced since the plaintiffs failed to demonstrate that all event contracts available through Kalshi and Polymarket US satisfied the statutory definition of a swap.
The court order stated that issuing a preliminary injunction was warranted to preserve the current status quo pending a complete determination of the case on its merits.