A U.S. federal court has granted a preliminary injunction requested by prediction market platforms Polymarket and Kalshi, temporarily blocking Minnesota's law that would have criminalized such activity. The ruling, issued by U.S. District Judge Katherine Menendez on July 28, 2026, marks a significant legal win for the platforms and the broader prediction market industry.
The court determined that the contracts traded on these platforms—classified as prediction markets and swaps—fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), not state regulators. Minnesota had sought to ban prediction markets as illegal gambling, but Judge Menendez’s decision indicated a strong likelihood that federal law preempts the state measure.
The preliminary injunction prevents Minnesota from enforcing its prohibition while the legal challenge proceeds. This provides immediate relief for Polymarket and Kalshi, which faced potential criminal charges under the new law. The ruling reinforces the argument that these financial instruments are primarily federal matters and could set a precedent limiting other states from imposing their own bans.
For the prediction market sector, this is a pivotal moment. The decision could pave the way for a more uniform regulatory framework nationwide, reducing the current patchwork of state laws. However, the CFTC has yet to issue comprehensive guidelines for these platforms, leaving some regulatory uncertainty. Legal experts suggest that if federal jurisdiction is ultimately upheld, it may encourage other platforms to challenge state-level restrictions.
