Federal Judge Blocks Minnesota's Prediction Market Ban

While prediction market platforms have been on the wrong end of court battles with states, such as Kalshi ceasing sports event contracts and more in Nevada, they did get a bit of a win in Minnesota. 

In Minnesota, the state passed the first-ever ban on prediction markets, which was followed by the Commodity Futures Trading Commission suing the state. 

Now, a federal judge in Minnesota has issued a preliminary injunction blocking the ban, finding that "the federal regulatory agency and the prediction market companies proved they were likely to prevail at least in part in their lawsuit," according to MPRNews. 

The ban took effect in May, when Governor Tim Walz signed the bill. 

Judge Says CFTC Likely Has Jurisdiction

Judge Katherine Menendez issued a 44-page ruling. In it said various things, such as the following: 

“Kalshi and Polymarket US are designated contract markets, so the CFTC has exclusive jurisdiction to regulate transactions involving those `swaps.’”

She did say, though, that some contracts could be subject to challenge or injunction, specifically mentioning the winners of "Love Island," as that may not fall in the CFTC's domain. 

“But given the unique nature of Minnesota’s prediction market statute, the posture of these cases, and the imminent effective date of Minnesota’s statute, a preliminary injunction maintaining the status quo until the merits of this case can be fully resolved is appropriate,” Menendez added.

Lawmakers Respond as Legal Fight Continues

In response to the ruling, Democrat Rep. Emma Greenman was disappointed. 

“If it walks like a duck and if it quacks like a duck, it’s gambling,” Greenman said. “It’s a duck and we should be able to regulate it in the public interest," Greenman said. 

Prediction markets have been in the headlines a lot dating back to the 2024 presidential election. This is when they first exploded in popularity and predicted that Donald Trump would defeat Kamala Harris. 

Speaking of Trump, his teleprompter operator was recently under investigation by the CFTC over trades he made involving Trump's speeches, which Trump called a "disgrace." 

Now we'll see where this fight in Minnesota goes; it could end up going to the Supreme Court.