TLDR
- A US federal judge issued a preliminary injunction blocking Minnesota’s prediction market ban
- The ruling covers CFTC-regulated platforms Kalshi and Polymarket US
- Judge Katherine Menendez found the state law likely conflicts with the federal Commodity Exchange Act
- The CFTC itself was also a plaintiff in the lawsuit against Minnesota
- The injunction stays in place until a final decision on the merits is reached
A federal judge has temporarily blocked Minnesota from enforcing a new law that would have banned prediction markets in the state, letting Kalshi and Polymarket US keep operating while the case works through the courts.
Kalshi and Polymarket Gain Temporary Legal Win as Court Blocks Minnesota Ban
Reuters reported that a U.S. federal judge has blocked Minnesota from enforcing a new law that would have become the first state law in the country to directly ban prediction markets such as Kalshi and… pic.twitter.com/5EogYw9RHg
— Wu Blockchain (@WuBlockchain) July 27, 2026
US District Judge Katherine Menendez issued the preliminary injunction on Monday. She ruled that Minnesota’s law is likely preempted by the federal Commodity Exchange Act.
What the Case Is About
Minnesota passed a law that would ban the creation, operation, and advertising of prediction markets. It was set to take effect this Saturday. Violations could carry criminal penalties.
Kalshi, Polymarket US, and the CFTC sued Minnesota after the law passed. They argued the state had no authority to regulate these products because prediction market contracts are structured as “swaps,” which fall under federal jurisdiction.
Judge Menendez agreed, at least for now. She found the plaintiffs were likely to succeed in showing the federal law overrides the state ban.
The ruling said denying the injunction would cause “irreparable harm” to the platforms.
What the Judge Said
The judge noted that prediction market contracts that qualify as swaps fall under the CFTC’s exclusive jurisdiction. Because the CFTC regulates designated contract markets, states cannot enforce separate laws targeting those same products.
She did add a caution. Not every contract listed on the platforms may qualify as a swap. She pointed to predictions about who wins the TV show “Love Island” as a possible example of a contract that might not meet the legal definition.
Still, she said it would be too difficult to craft a narrow injunction targeting only those edge cases right now.
The injunction covers both platforms and keeps the status quo until a full trial resolves the matter.
The CFTC’s involvement as a co-plaintiff added weight to the case. The federal regulator’s participation signaled its intent to defend its jurisdiction over prediction market products nationally.
This case could set a precedent for how other states approach prediction market regulation going forward.
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