Judge blocks first state law that would have banned prediction markets
Judge may allow Minnesota to ban some types of bets, but not all of them.
A federal judge has paused Minnesota's attempt to become the first U.S. state to outlaw prediction markets, handing Kalshi and Polymarket a preliminary victory just days before the ban was set to take effect.
The ruling is narrow but consequential. Minnesota can still pursue restrictions on certain wager types, but the state's total prohibition is now off the table pending litigation. The core legal fault line runs through the Commodity Futures Trading Commission's claim of exclusive federal authority over event contracts. If those contracts qualify as "swaps," state-level bans become structurally difficult to enforce.
The Trump administration's decision to side with the platforms is the more telling signal. Federal backing transforms what could have been a state-by-state patchwork into a coordinated jurisdictional test. Other legislatures watching Minnesota now have a template for what fails and what might survive.
Prediction markets are no longer operating in a regulatory gray zone. They are being actively absorbed into the federal perimeter, with the CFTC positioned as the primary gatekeeper. The platforms gain legal certainty; states lose the easy option of prohibition and are left negotiating the edges.