Federal judge blocks Minnesota's prediction market ban before it takes effect

What happened

US District Judge Katherine Menendez granted preliminary injunctions on 27 July blocking Minnesota's Senate File 3432, which was due to take effect in August and would have criminalised creating, operating, managing or controlling a prediction market platform, reaching even providers of data and verification services. The motions were brought in parallel suits by Kalshi, Polymarket and the federal government on behalf of the CFTC. Menendez found the plaintiffs likely to succeed on their claim that the Commodity Exchange Act, which gives the CFTC exclusive jurisdiction over swaps, preempts the state statute, and that the platforms would suffer financial and operational harm if the ban proceeded. The injunction holds until the merits are decided.

Why it matters

The order extends the preemption line that has so far shielded federally registered event-contract venues from state gambling law, and it does so with the federal regulator itself standing as a plaintiff against a state—an unusual posture that strengthens the platforms' position in the dozen-odd state disputes now running. For state legislatures weighing bans of their own, the message is that the route through criminal law is narrowing while the CFTC's own rulemaking on public-interest determinations, proposed in June, becomes the venue that matters.

What is not settled

Menendez noted that not every contract listed on these platforms necessarily qualifies as a federally protected swap, which could limit the scope of any permanent injunction. The merits remain to be decided, and Minnesota's response—including any appeal—is not yet on the record. Reports also frame the federal suit differently: CoinDesk lists the CFTC among the plaintiffs, while Courthouse News describes the action as brought by the Trump administration; the order itself is the authority on the caption.