U.S. District Judge Katherine Menendez granted a preliminary injunction on Monday blocking Minnesota from enforcing its new law banning prediction markets, allowing Kalshi and Polymarket to continue operating in the state while litigation proceeds. The injunction was requested by the Commodity Futures Trading Commission, Kalshi, and Polymarket, who filed suit in May arguing that Minnesota is unlawfully attempting to regulate federally overseen derivatives markets under the CFTC's exclusive jurisdiction. Minnesota lawmakers passed the law earlier this year prohibiting the creation, operation and advertising of prediction markets, scheduled to take effect on Aug. 1.
Judge Rules Minnesota Law Likely Preempted by Federal Commodity Exchange Act
In the Monday ruling, Judge Menendez wrote that Minnesota's prediction market statute is "likely at least partially preempted by the CEA because the CFTC has been given exclusive jurisdiction over transactions involving swaps traded on DCMs." The judge stated that "a preliminary injunction prohibiting Defendants from enforcing Minnesota's prediction market statute strikes the right balance of harms while preserving the status quo." The CFTC, Kalshi and Polymarket filed suit against the state in May under the argument that Minnesota is unlawfully attempting to regulate federally overseen derivatives markets that fall under the CFTC's "exclusive jurisdiction" under the federal Commodity Exchange Act.
Kalshi Faces Enforcement Actions in New York, Michigan, Washington
Southern District of New York Judge Analisa Torres denied Kalshi's motion for an emergency injunction pending appeal on Monday. Earlier this month, Torres also denied the company's request for a preliminary injunction. Last month, a Michigan judge issued a temporary restraining order against Kalshi, blocking the platform from offering sports-related event contracts in the state. Last week, a Washington court granted a request to temporarily block Kalshi from offering sports-related event contracts in the state, saying it operates illegal gambling activities under state law.
Kalshi and Polymarket Lead Prediction Market Trading Volume
Kalshi and Polymarket remain the dominant prediction market platforms in the world in trading volume. Kalshi's monthly volume reached $33 billion in June, while Polymarket and its U.S. platform saw a combined $13.95 billion, according to The Block's data dashboard.
FAQ
What did the federal judge rule on Monday regarding Minnesota's prediction market law?
U.S. District Judge Katherine Menendez granted a preliminary injunction on Monday blocking Minnesota from enforcing its new law banning prediction markets. The judge ruled that Minnesota's prediction market statute is likely at least partially preempted by the federal Commodity Exchange Act because the CFTC has been given exclusive jurisdiction over transactions involving swaps traded on designated contract markets.
What legal challenges is Kalshi facing in other states?
Kalshi is facing enforcement actions in New York, Michigan, and Washington. On Monday, a New York judge denied Kalshi's motion for an emergency injunction pending appeal. Last month, a Michigan judge issued a temporary restraining order blocking Kalshi from offering sports-related event contracts. Last week, a Washington court granted a request to temporarily block Kalshi from offering sports-related event contracts in the state.
How much trading volume do Kalshi and Polymarket generate?
Kalshi's monthly volume reached $33 billion in June, while Polymarket and its U.S. platform saw a combined $13.95 billion in June, according to The Block's data dashboard.
