Federal Judge Blocks Minnesota's First-in-Nation Prediction Markets Ban

U.S. District Judge Katherine Menendez issued a preliminary injunction blocking Minnesota's first-in-the-nation ban on prediction markets just days before its August 1, 2026 effective date. The ruling came after the CFTC, Kalshi, and Polymarket sued, arguing the Commodity Exchange Act preempts state law. Minnesota Attorney General Keith Ellison defended the ban, calling the platforms predatory gambling, while federal regulators argue they are federally overseen swaps.

Minnesota prediction market ban

• ▪The Minnesota Senate passed the prediction market ban legislation by a 56-10 vote on April 30, 2026.
• ▪Minnesota Governor Tim Walz signed a law in May 2026 that explicitly outlaws prediction market wagers on sports, weather, popular culture, war, and death.
• ▪Minnesota embedded its prediction market ban in a broader public safety bill, characterizing the platforms as gambling and a public health and safety issue.

Federal preemption of state law

• ▪U.S. District Judge Katherine Menendez granted a preliminary injunction on July 27, 2026, temporarily blocking Minnesota from enforcing its prediction market ban.
• ▪Judge Katherine Menendez ruled that the Commodity Exchange Act likely preempts Minnesota's law because the federal statute grants the CFTC exclusive jurisdiction over event contracts.

CFTC regulatory jurisdiction

• ▪Under the Donald Trump administration, the Commodity Futures Trading Commission has argued that event contracts traded on prediction markets qualify as swaps under federal jurisdiction.
• ▪The Commodity Futures Trading Commission, Kalshi, and Polymarket filed lawsuits in May 2026 to block the Minnesota law from taking effect on August 1, 2026.

Kalshi and Polymarket operations

• ▪A White House teleprompter operator reportedly made over $100,000 by using inside information to bet on the content of Donald Trump's speeches on prediction markets.
• ▪Kalshi and Polymarket argued that Minnesota's ban would cause irreparable harm by disrupting a nationally uniform market and violating First Amendment advertising rights.

Multi-state legal challenges

• ▪Massachusetts, Michigan, Nevada, and Washington state have secured court orders restricting Kalshi's prediction market activities under state gaming laws.
• ▪A federal judge in Arizona blocked a criminal prosecution against Kalshi, finding that federal law preempts state gambling laws regarding prediction markets.