Minnesota prediction market ban blocked by federal judge

Key Points:

• A federal judge granted a preliminary injunction to pause Minnesota’s new ban on prediction markets, preventing its enforcement against federally registered designated contract markets just days before it was set to take effect.
• The ruling was prompted by lawsuits from the Justice Department, the Commodity Futures Trading Commission (CFTC), and prediction market companies Kalshi and Polymarket US, who argued that federal law pre-empts the state ban.
• Judge Katherine Menendez found that the plaintiffs are likely to succeed on their claim that federal law, which gives the CFTC exclusive regulatory authority, overrides Minnesota’s law and that enforcing the ban would cause irreparable harm.
• Minnesota’s ban, embedded in a public safety bill and framed as a gambling regulation, prohibits companies from operating prediction markets within the state but does not penalize in-state users.
• Similar legal challenges are occurring in other states, including Arizona, Nevada, and Utah, where courts have also found federal law pre-empts state efforts to restrict prediction markets or gambling-like transactions.