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Gaming Edge’s TL;DR
- A federal judge has temporarily blocked Minnesota’s new law banning prediction markets.
- The ruling comes just days before it was set to take effect.
U.S. District Judge Katherine Menendez has blocked Minnesota’s new law banning prediction markets. She ruled that the Commodity Futures Trading Commission, Kalshi, and Polymarket were likely to succeed in their challenge to the law.
She also found that letting the ban take effect would cause “irreparable harm” to the operators, so the law will remain on hold while the case moves forward.
The Minnesota law would have made it a crime to create or operate a prediction market, or to help administer nearly any activity connected to one. It had been scheduled to take effect Aug. 1.
Prediction market firms applaud decision
At the center of the case is a broader dispute over who regulates prediction markets in the US. Kalshi, Polymarket, and the CFTC argue that federal commodities law gives the commission exclusive jurisdiction over the event-contract transactions offered on the platforms. States, meanwhile, have argued that much of the business looks like sports betting and should fall under state gambling laws.
Minnesota Attorney General Keith Ellison said prediction markets are “gambling, plain and simple” and said the state has the right to keep “predatory gambling” out of its communities.
Polymarket chief legal officer Neal Kumar said the ruling shows that commission-registered exchanges are governed by federal law, not state rules. Kalshi spokesperson Elisabeth Diana similarly said states cannot ban products outside their jurisdiction.
Legal fight just beginning
The case matters beyond Minnesota because it adds to the growing legal fight between states and federal regulators over event contracts tied to sports and other outcomes. According to the AP, the CFTC chair declared in February that the agency would no longer allow states to regulate or ban prediction markets in ways that “undermine the agency’s exclusive jurisdiction.”
Industry stakes are also rising. The American Gaming Association estimates states have lost more than $1.2 billion in tax revenue from wagers since prediction markets began offering sports-event contracts.
Minnesota’s ban is not taking effect for now, but the underlying legal fight is far from settled.
Based on reporting by Marc Levy for the Associated Press via WKMG News6.
