Minnesota blocked from enforcing prediction market ban

A preliminary injunction suspends what would have been the first outright ban on prediction markets in the US.

US.- District Judge Katherine Menendez has granted a preliminary injunction stopping the state of Minnesota from enforcing a ban on prediction markets that was due to take effect on August 1, 2026. The injunction was granted at the request of the Commodity Futures Trading Commission, Kalshi, and Polymarket.

Minnesota became the first US state to introduce an outright ban on prediction markets when Governor Tim Walz signed a law in May that makes it a felony to create, operate, or promote a prediction market platform within the state. However, the CFTC, along with Kalshi and Polymarket, initiated a lawsuit in May, arguing that the law is preempted by the Commodity Exchange Act, which provides the CFTC with exclusive jurisdiction over swaps traded on designated contract markets.

Menendez found the plaintiffs likely to succeed, at least in part, on their preemption claims. The judge wrote that Minnesota’s prediction market statute is “likely at least partially preempted by the CEA because the CFTC has been given exclusive jurisdiction over transactions involving swaps traded on DCMs.” She added that a preliminary injunction “strikes the right balance of harms while preserving the status quo.”

The ruling applies to entities registered with the CFTC as designated contract markets. Menendez noted the statute may not be preempted in every application, as the plaintiffs had not shown that every event contract qualifies as a swap under federal law.