A federal judge determined that Minnesota's prediction market prohibition likely contravenes the federal Commodity Exchange Act.
By Nikhilesh De|Edited by Jesse Hamilton Jul 27, 2026, 11:29 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on CFTC Chair Mike Selig (CoinDesk)A federal judge has issued a preliminary injunction against Minnesota's law that bans prediction markets, asserting that the law likely conflicts with the Commodity Exchange Act. This ruling benefits Kalshi, Polymarket, and the Commodity Futures Trading Commission (CFTC).
Judge Katherine Menendez, serving in the U.S. District Court for Minnesota, ruled on Monday that the newly enacted Minnesota law, which prohibits prediction market operators from providing their services in the state, appears to be preempted by the federal Commodity Exchange Act. The judge indicated that the companies and the federal regulator “are likely to succeed” in demonstrating this after a complete trial.
Earlier this year, Kalshi, Polymarket, and the CFTC initiated a lawsuit against Minnesota after the state enacted the ban, claiming that the legislation infringes upon the CFTC’s authority to regulate “swaps,” which are the framework for prediction market contracts.
In her decision, Judge Menendez noted that the plaintiffs have demonstrated a strong likelihood of succeeding in their claims that the federal law governing U.S. commodities exchanges overrides the state law, affirming the CFTC's jurisdiction over these products. She stated that the plaintiffs are likely to prevail on the substantive issues of the case.
“The Court finds that Plaintiffs have met their burden to show they are likely to succeed on the merits of their express-preemption claims, particularly regarding the application of Minnesota’s law to many of the trades listed on Kalshi’s and Polymarket US’s platforms,” the ruling explained. “Specifically, it seems that whether the Minnesota statute is expressly preempted hinges on whether the state law seeks to regulate trades in event contracts that qualify as ‘swaps’ within the CEA's definition.”
While some contracts available on prediction markets may fall under the Minnesota law, such as bets on the outcome of the television show “Love Island,” the judge expressed that it would be challenging to restrict a preliminary injunction solely to those specific instances.
Additionally, failing to pause the law would result in “irreparable harm” to Kalshi and Polymarket, according to the ruling.
The preliminary injunction will remain in effect until a final determination is made regarding the case's merits, as stated by the judge.
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