Federal judge blocks Minnesota's statewide ban on prediction markets, allowing limited enforcement
A U.S. district judge issued a preliminary injunction halting Minnesota's total prohibition of prediction-market platforms, though the state may still restrict certain types of contracts that do not qualify as swaps under federal law.
A federal judge in Minnesota has temporarily stopped the state from enforcing a law that would have banned all prediction-market wagering. The preliminary injunction, issued by U.S. District Judge Katherine Menendez, follows a lawsuit filed by the Trump administration and the two largest prediction-market operators, Kalshi and Polymarket, which argue that the Commodity Futures Trading Commission (CFTC) has exclusive authority over such contracts.
Menendez said the state’s ban is likely preempted by federal law because many of the contracts offered on the platforms meet the legal definition of “swaps,” which fall under the CFTC’s jurisdiction. She wrote that “event contracts hosted by Kalshi and Polymarket … fit that definition because they concern the occurrence of events with clear potential economic, financial, or commercial consequences.”
"Prediction markets are gambling, plain and simple, and Minnesota has every right to keep predatory gambling out of our communities," Minnesota Attorney General Keith Ellison said in a statement.
The judge noted that not all prediction-market contracts qualify as swaps. For example, bets on the outcome of the reality-TV show Love Island USA appear outside the CFTC’s regulatory scope. Consequently, the court’s order leaves open the possibility that Minnesota could still prohibit certain event contracts that do not meet the swap definition.
Menendez indicated that the case will continue in district court, and the state may appeal the ruling. She cautioned that her decision is not a final judgment on the merits and that further arguments could affect the ultimate outcome.