A federal judge has temporarily blocked Minnesota from enforcing its new prediction-market felony law against platforms regulated by the Commodity Futures Trading Commission, including Kalshi and Polymarket US. The preliminary injunction, issued July 27 by Judge Katherine Menendez, comes days before the law was set to take effect Aug. 1. The order bars named Minnesota officials from enforcing Minn. Stat. § 609.7615 against these entities until a final ruling on the merits.
The court's reasoning
Judge Menendez found that the Commodity Exchange Act likely preempts the state law when it comes to swap transactions on CFTC-designated contract markets. The Commodity Exchange Act gives the CFTC exclusive jurisdiction over such transactions, the court said. That finding was enough to grant the preliminary injunction, though the judge has not yet ruled on the plaintiffs' other claims, including implied preemption and First Amendment arguments.
The law, known as Chapter 118, replaces earlier provisions on prediction markets and makes operating a covered prediction market a felony. It also includes penalties for data providers, payment services, and advertisers involved with such markets.
What the order covers
The injunction is narrow. It protects only CFTC-designated contract markets — meaning Kalshi and Polymarket US, which is operated by QCX. It does not shield customers, independent advertisers, or other service providers from prosecution under the law. Polymarket US said it expects to continue serving Minnesota users under the court's protection.
Minnesota Attorney General Keith Ellison said the state disagrees with the ruling and will continue defending the law. The state can still enforce the felony provisions against anyone not covered by the order.
The court has not yet decided the broader legal questions. A separate case in New York earlier this month denied Kalshi interim protection from existing state gambling enforcement, highlighting the patchwork of legal challenges prediction markets face. The Minnesota case will now move toward a final decision on the merits, with the preliminary injunction holding in the meantime.
The unresolved question: whether the state can ultimately prove its law is not preempted by federal commodities rules — and whether the First Amendment claims will change the outcome.
