A federal judge stopped Minnesota’s prediction-market ban four days before it was set to take effect, and the reasoning matters more than the outcome.
Minnesota’s law, signed by Governor Tim Walz, would have made operating a prediction-market platform a felony starting August 1. Kalshi, Polymarket, and the CFTC sued, and the CFTC’s press release on filing called it the agency’s response to “unprecedented state overreach,” with Chairman Michael Selig warning the statute “turns lawful operators and participants in prediction markets into felons overnight.” U.S. District Judge Katherine Menendez agreed, at least provisionally, ruling the Commodity Exchange Act likely preempts Minnesota’s statute because many Kalshi and Polymarket contracts meet the legal definition of a swap, over which the CFTC has exclusive jurisdiction.
Here’s the twist: Menendez didn’t hand Minnesota a clean loss. She flagged that bets on Love Island USA outcomes probably aren’t swaps at all, meaning the state may still get to ban some contracts once the case is fully litigated.
This is the latest state the CFTC has sued over prediction-market restrictions, after Connecticut, Illinois, Arizona, New York, and others. Every ruling that narrows rather than resolves the swap question pushes this toward the Supreme Court, since AG Keith Ellison’s office has signaled it intends to keep fighting rather than fold.
Ellison isn’t backing down: “Prediction markets are gambling, plain and simple,” he said. Minnesota hasn’t said whether it will appeal.
Rebecca Lauren