A federal judge granted Kalshi and Polymarket, the Commodity Futures Trading Commission (CFTC), and the Justice Department (DOJ) a preliminary injunction on July 27, 2026, blocking Minnesota from enforcing what would have been the nation’s first law directly banning prediction markets, days before its August 1 effective date.
Inside the Ruling
US District Judge Katherine Menendez in Minneapolis found the plaintiffs were likely to succeed, at least in part, on their claim that federal law expressly preempts Minnesota’s ban, specifically the Commodity Exchange Act’s grant of “exclusive jurisdiction” to the CFTC over swaps traded on federally registered contract markets.
The order bars Minnesota from enforcing the law, Minnesota Statute 609.7615, against entities registered with the CFTC as designated contract markets.
Menendez wrote in a footnote that “the Minnesota statute may not be preempted in all its applications. But the Court finds the state law is likely preempted in many respects. Therefore, temporarily enjoining enforcement of the statute maintains the status quo while enabling further development on this issue and others.”
She explicitly did not rule on the companies’ separate implied-preemption or First Amendment claims, including Polymarket’s argument that the ban would disrupt “a nationally uniform market” and violate its right to advertise.
Minnesota’s law, embedded in a broader public safety bill and signed by Democratic Governor Tim Walz in May, would have made creating, operating, or facilitating a covered prediction market a felony, while also criminalizing certain support, data, and payment services and advertising tied to prohibited transactions, covering markets on sports, elections, government action, legal cases, and popular culture.
Notably, the law contained no language punishing Minnesota residents for using prediction markets directly, targeting the companies’ operations rather than individual users.
Both Sides Make Their Case
Kalshi spokesperson Elisabeth Diana said the ruling “makes it clear: States cannot ban things that they don’t have jurisdiction over.”
Minnesota Attorney General Keith Ellison disagreed and said he would continue defending the law, stating plainly that “prediction markets are gambling, plain and simple, and Minnesota has every right to keep predatory gambling out of our communities.”
Minnesota state Rep. Emily Greenman defended the underlying rationale for the law, telling NBC News: “Gambling has always been a public health and a public safety issue since states have been regulating it, and that has always been an uncontested fact.”
The CFTC had pressed for an urgent ruling, sending a letter indicating it would seek emergency appellate relief if the court didn’t respond by the next day, a request Kalshi and Polymarket joined.
Menendez also cautioned against assuming CFTC registration alone settles every contract’s legal status, noting the plaintiffs hadn’t shown that every event contract on Kalshi and Polymarket meets the federal definition of a swap.
She used weather or crop contracts, which may carry a clearer economic consequence, as a contrast to some sports propositions, which may not, suggesting any final, permanent relief could ultimately cover fewer products than this preliminary injunction does.
A Fragmented, State-by-State Battle
This ruling doesn’t resolve the broader dispute nationally, and it’s worth being precise about what it does and doesn’t affect elsewhere.
Massachusetts, Michigan, Nevada, and Washington have all obtained separate court orders restricting parts of Kalshi’s activity under existing state gambling laws rather than new prediction-market-specific bans like Minnesota’s, and Kalshi and Polymarket have separately lost bids to halt proceedings in Nevada and Washington.
Utah has also banned proposition betting, applying it to prediction markets.
Arizona took a different approach after filing criminal charges against Kalshi in March; a federal judge blocked that prosecution on the same federal preemption theory that succeeded in Minnesota.
Our earlier coverage of Kalshi’s multi-state gambling disputes tracks this fragmented legal landscape in more detail.
What Comes Next
The underlying Minnesota lawsuits now move toward final decisions on the merits, and a separate CFTC rulemaking proposal, whose public comment period closed the same day as this ruling, could further shape how event contracts involving gaming, war, terrorism, or unlawful conduct get reviewed going forward.
What this means for you: this injunction keeps Kalshi and Polymarket operating in Minnesota for now, but it’s a preliminary, provisional ruling rather than a final resolution, and the state-by-state legal patchwork means access and legal status can still differ meaningfully depending on where you live.
