A federal judge blocked Minnesota’s first-in-nation prediction markets ban on Monday, handing Kalshi, Polymarket and federal regulators an early win.
U.S. District Judge Katherine Menendez, in Minneapolis, issued a preliminary injunction after Gov. Tim Walz signed the measure in May and lawmakers set the law to hit on Aug. 1. The statute would have made it a crime to operate, host or promote a prediction market in Minnesota.
The ruling froze the new ban before the platforms could be forced offline in the state.
“maintaining the status quo,” Menendez said.
The judge said the challengers were likely to win their federal preemption fight.
“is appropriate,” she said.
The U.S. Commodity Futures Trading Commission had sued Minnesota a day after Walz signed the bill, arguing the state was trying to criminalize markets Congress already put under federal oversight.
“This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” CFTC Chairman Michael S. Selig said.
Minnesota Attorney General Keith Ellison pushed back hard in June, saying the state had every right to keep the markets out.
“Prediction markets are gambling, plain and simple,” Ellison said.
Kalshi’s Elisabeth Diana answered the law with a social media swipe.
“Peak hypocrisy,” Diana wrote.
Polymarket also rejected Minnesota’s case for control over the contracts.
“runs counter to the federal government’s established framework,” the company said.
Lawmakers in St. Paul framed the bill as a gambling crackdown, not a tech fight.
“I’m concerned that the rapid increase in access to prediction markets will create a spike in gambling addiction and financial loss,” Sen. John Marty said.
In the viral moment, Walz signed the measure in May after the legislature approved it.
The law made Minnesota the first state to outlaw prediction markets and set Aug. 1 as the start date.
It also made operating, hosting or promoting the markets a felony in Minnesota.
The final line of the order matters most for now.
The law was set to take effect Aug. 1.