Federal Judge Puts Minnesota Prediction-Market Ban on Hold

A federal judge has temporarily blocked Minnesota from enforcing specified parts of a new statewide prediction-market law, days before the restrictions were scheduled to take effect.

U.S. District Judge Katherine Menendez issued a preliminary injunction on July 27, stopping enforcement of the challenged provisions of Minnesota’s Chapter 97 before their scheduled August 1, 2026, effective date. The order preserves the current situation while the federal case proceeds.

For now, Minnesota cannot enforce the enjoined provisions against the affected activity. Prediction-market platforms including Kalshi and Polymarket may continue operating in Minnesota while the injunction remains in place, subject to later court orders.

What the court order changed

The injunction temporarily blocks statewide enforcement of the challenged Chapter 97 provisions. The case asks whether Minnesota may regulate the event-contract transactions at issue or whether federal law preempts the state restrictions.

The ruling is preliminary. It does not repeal Minnesota’s law, permanently invalidate it or resolve the case’s final outcome. The court could later modify or lift the injunction, and the litigation will continue.

What Minnesota’s law would prohibit

Chapter 97 defines a prediction market as a system that allows consumers to wager on the future outcome of a specified event. The definition lists examples including sports and games, elections and government conduct, legal proceedings, weather, public emergencies, death, popular-culture events and statements by individuals.

The law makes it a felony, when done for consideration and as part of a business, to create a prediction market or operate, manage or control a platform intended for consumers to place wagers. It also covers specified activities that intentionally facilitate a market, including listing events, handling or directing money, administering terms or settlements, acting as a counterparty, setting prices or odds, and providing certain data, verification, location, money-transfer or payment services.

Chapter 97 separately makes it a felony to advertise or market financial or technological products that promote transactions prohibited by the section. The statute includes exceptions for activities that are not bets under Minnesota law and for contracts authorized and regulated under specified insurance chapters.

The statutory language does not establish that every prediction market or every type of event contract is covered. The court dispute concerns the categories of transactions and services addressed by the law and the extent of Minnesota’s authority over them.

Why Kalshi, Polymarket and the CFTC challenged enforcement

Kalshi, Polymarket and the Commodity Futures Trading Commission challenged Minnesota’s enforcement position in federal court. Their central argument is that the federal Commodity Exchange Act gives the CFTC exclusive jurisdiction over at least many of the event-contract transactions offered on the platforms.

Judge Menendez agreed, for purposes of the preliminary injunction, that the challengers were likely to succeed on their preemption claims as to many of the trades at issue and that allowing the law to take effect could cause irreparable harm to the operators. That is a temporary assessment, not a final determination that Minnesota lacks authority over every transaction or service covered by the statute.

Minnesota’s position and the challengers’ arguments remain part of the ongoing litigation. The court has not issued a final ruling on the law’s validity, the full scope of federal preemption or the ultimate reach of the CFTC’s authority.

What it means for Minnesota residents and businesses

The August 1 effective date does not currently trigger enforcement of the enjoined provisions. While the injunction remains in effect, the state cannot use those provisions to impose the law’s planned restrictions or felony penalties.

Kalshi and Polymarket may continue operating in Minnesota for now, according to the reported effect of the order. That does not guarantee that every product, transaction or related service is permanently lawful, and it does not prevent future court orders from changing the platforms’ position.

Residents and operators should treat the current status as temporary. The federal case will determine whether Minnesota can enforce the prediction-market restrictions and how any final decision applies to the platforms and transactions at issue.

What happens next

The federal litigation will continue after the preliminary injunction. The parties may seek additional rulings as the court evaluates the competing claims under Minnesota law and the Commodity Exchange Act.

Until the court changes the order, the challenged Chapter 97 provisions remain on the books but cannot be enforced as scheduled. The injunction could be modified, lifted or replaced by a final judgment after further proceedings.

Sources

• Minnesota Chapter 97 session law
• AP: Minnesota’s first-in-the-nation law banning prediction markets is halted in federal court
• CBS Minnesota: Federal judge temporarily blocks Minnesota law that would ban most bets on prediction markets

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