Federal judge blocks Minnesota's prediction markets ban

Federal jurisdiction underpins Minnesota injunction

Judge Katherine Menendez granted a preliminary injunction blocking Minnesota’s prediction-market ban, finding that federal law likely overrides at least part of the state statute, according to EGR Intel reporting republished by GambleRss. The decision came on Monday, 27 July, days before legislation making the creation or operation of prediction markets a criminal offence was scheduled to take effect.

In her 44-page ruling, Menendez found that the plaintiffs—the CFTC, Kalshi and Polymarket—were likely to succeed on their federal-preemption claims under 7 U.S.C. § 2(a)(1)(A). Her reasoning centred on the Commodity Exchange Act and the Commodity Futures Trading Commission’s exclusive authority over transactions involving swaps traded on designated contract markets. The injunction is preliminary, rather than a final resolution of the lawsuit.

Prosecution and cancelled trades posed risks

Menendez found that Kalshi and Polymarket US faced a sufficient prospect of irreparable harm to justify relief. Minnesota’s defendants had not ruled out enforcing the statute against them, leaving the platforms exposed to possible criminal prosecution once the law took effect.

The court also considered the consequences of unwinding trades. Given the volume of activity by Minnesotans, forced cancellations could leave Kalshi and Polymarket with significant liabilities to traders. Sovereign immunity would prevent the platforms from recovering damages from the state even if they ultimately won, while enforcement could undermine existing customers’ confidence and discourage new participation. Menendez separately found that encroachment on the CFTC’s exclusive jurisdiction could irreparably harm the regulator.

State opposition continues

Minneapolis Democrat Emma Greenman criticised the decision in comments to MPRnews.org, according to the report. She characterised prediction markets as gambling and argued that the state should retain the ability to regulate them in the public interest.

The ruling coincided with Kalshi’s agreement with the Nevada Gaming Control Board to implement third-party geofencing that would block people physically located in Nevada from using its platform. The report also said that, in the preceding week, two Nevada congressmen had introduced the Prediction Markets are Gambling Act, aimed at stopping platforms from offering sports and casino-style event contracts.

What it means for prediction markets

• Minnesota’s restriction is blocked for now, not finally invalidated. The court found likely federal preemption of at least part of the statute; the underlying dispute remains unresolved.
• Jurisdiction is the central issue. The ruling rests on the CFTC’s exclusive authority under the Commodity Exchange Act, alongside the potential harm from state enforcement.
• Access remains geographically contested. Kalshi’s Nevada geofencing agreement and the proposed federal bill show that the Minnesota injunction does not settle restrictions elsewhere.