Judge blocks Minnesota ban on prediction markets Kalshi and Polymarket

A federal judge in the United States has temporarily blocked Minnesota from enforcing a new law that prohibits prediction markets such as Kalshi and Polymarket. It is the first state law in America to directly restrict such platforms. The judge ruled that federal legislation likely overrides the state law.

Temporary injunction after joint lawsuit

U.S. District Judge Katherine Menendez in Minneapolis issued a preliminary injunction at the request of Kalshi, Polymarket and the U.S. Commodity Futures Trading Commission (CFTC). The judge found that federal law likely pre-empts the new state law, thereby preventing it from taking effect for now, Reuters reports.

The law was due to come into effect on Saturday. Minnesota Governor Tim Walz signed the law in May, making his state the first in the country to criminalise operating, hosting or promoting prediction markets. Kalshi, Polymarket and the CFTC subsequently jointly went to court to stop the law.

What does this mean for prediction markets?

The ruling is a temporary legal victory for the platforms, but the case is not yet closed. The judge has only blocked enforcement of the law until a final judgement is reached. The core argument in the case revolves around whether a state has the authority to prohibit activities that are already regulated at the federal level.

For Kalshi and Polymarket, this is a significant outcome. Had the Minnesota law gone ahead, it could have set a precedent for other states to introduce similar bans. Now that the judge has intervened, both platforms remain active in Minnesota for the time being while the legal battle continues.