Kalshi, Polymarket Win Injunction Blocking Minnesota’s Aug. 1 Trading Ban

A federal judge has blocked Minnesota from enforcing a law that would have banned prediction markets Kalshi and Polymarket US starting Aug. 1, siding with the platforms and the Commodity Futures Trading Commission in a ruling issued July 27. US District Judge Katherine Menendez, of the District of Minnesota, granted preliminary injunctions to all three plaintiffs, finding they are likely to prevail on claims that the federal Commodity Exchange Act preempts the state statute.

Why the CEA trumps the state ban

Minnesota’s law would have criminalized the creation, operation and advertising of prediction markets in the state, with penalties for anyone supporting them. Kalshi, Polymarket and the CFTC sued earlier this year, arguing the statute intrudes on the CFTC’s exclusive federal jurisdiction over “swaps” — the legal category that event contracts on these platforms are structured as.

Judge Menendez agreed that many of the contracts listed on Kalshi’s and Polymarket US’s platforms likely meet that definition, putting them beyond the reach of state regulators. “The Court finds that Plaintiffs have met their burden to show they are likely to succeed on the merits of their express-preemption claims, at least as to the application of Minnesota’s law to many of the trades listed on Kalshi’s and Polymarket US’s platforms,” she wrote in the order.

An injunction, not a final win

The preliminary injunction lets Kalshi and Polymarket US keep operating in Minnesota while litigation continues, preserving the status quo rather than resolving the case outright. Judge Menendez was explicit that the ruling could later be narrowed: the plaintiffs did not demonstrate that every single event contract on the platforms qualifies as a swap under the CEA.

As an example of a contract that might sit outside federal swap jurisdiction, the judge pointed to prediction markets tied to the outcome of the reality TV show “Love Island.” She acknowledged the difficulty of crafting an injunction narrow enough to carve out only those edge-case contracts, which is part of why the broader pause was granted for now.

Why it matters for traders and the sector

The Minnesota case is one of several state-level fights over prediction markets that have escalated since regulators and lawmakers began scrutinizing whether platforms like Kalshi and Polymarket US need state gambling licenses on top of their CFTC-regulated status. A win for the states could have fragmented access to these products across the US on a state-by-state basis; this injunction instead reinforces the CFTC’s claim that federal commodities law governs the products nationally, at least for contracts that meet the swap definition.

For now, users in Minnesota retain uninterrupted access to Kalshi and Polymarket US event markets. But the ruling is preliminary, and the merits of the preemption argument — plus the question of which specific contracts qualify as swaps — will still be litigated in full.

Read more: CFTC Issues Second 2026 Warning to Kalshi, Polymarket Over Blanket Filings

Sources

• cointelegraph.com
• coindesk.com