Federal Judge Pauses Minnesota Prediction Market Ban After CFTC, Kalshi & Polymarket Challenge

• A U.S. federal judge has temporarily blocked Minnesota’s prediction market ban after the CFTC, Kalshi, and Polymarket challenged the state law.
• The court ruled that prediction market contracts may fall under the Commodity Exchange Act (CEA), potentially placing them under CFTC oversight instead of state gambling regulations.
• Judge Katherine Menendez found that Kalshi, Polymarket, and the CFTC have a strong chance of proving that Minnesota’s law conflicts with federal authority.

After the U.S. Commodity Futures Trading Commission (CFTC) and prediction platforms Kalshi and Polymarket challenged the law, claiming that it violates federal control over financial markets, a federal judge temporarily halted Minnesota’s ban on prediction markets.

Before Minnesota’s limits were scheduled to go into effect on August 1st, the CFTC requested an expedited ruling. The regulator had threatened to regard the motion as denied and seek emergency relief through an appeals court if the court did not render a ruling or grant a temporary stay.

The plaintiffs had a good chance of demonstrating that the federal Commodity Exchange Act (CEA) may supersede state law, according to Judge Katherine Menendez of the U.S. District Court for the District of Minnesota, who granted a preliminary injunction.

Minnesota’s Gambling Claims Face Legal Challenge Over Prediction Market Rules

When categorizing prediction market platforms’ operations as unlicensed gambling, Minnesota’s law aimed to restrict them. Kalshi, Polymarket, and the CFTC contended that their event-based contracts are financial products governed by federal commodities regulations rather than state gambling laws.

The judge pointed out that some prediction market contracts offered by platforms like Kalshi and Polymarket might be categorized as “swaps” under the Commodity Exchange Act (CEA), placing them under the CFTC’s regulatory authority. The plaintiffs have a good chance of demonstrating that Minnesota’s statute may obstruct federal supervision of these marketplaces, she continued.

Kalshi & Polymarket Secure Legal Win As U.S. Court Pauses Minnesota Ban

Kalshi and Polymarket had previously sued Minnesota separately, asking for comparable safeguards against the state’s limitations. The platforms backed the CFTC’s request for a temporary halt while their legal challenges are ongoing, according to the agency.

JUST IN: Kalshi has won a federal court ruling to block a Minnesota law from taking effect that would have banned prediction markets in the state. https://t.co/72KVaqkeTn pic.twitter.com/e4q4o1p3SW

— Kyle Cheney (@kyledcheney) July 27, 2026

The case brings to light the ongoing discussion about the proper regulation of prediction markets in the United States. Federal monitoring proponents contend that these platforms vary from traditional gambling in that users can exchange contracts linked to actual events instead of just betting against a bookmaker.

The Hyperliquid Policy Center and Multicoin Capital recently endorsed the CFTC’s proposed prediction markets structure, arguing that these platforms should be overseen by a single federal authority rather than being subject to separate rules in each of the 50 states.

They noted that whereas two players trade contracts at market prices in exchange-based prediction markets, where platforms receive fees for facilitating transactions, betting with a bookmaker entails betting against the house.

You need to login in order to Like