Federal judge blocks Minnesota from enacting first statewide prediction markets ban
A federal judge on Monday blocked Minnesota from enforcing a newly enacted law that would have made the state the first nationally to outright ban prediction markets. The statute, defended by Attorney General Keith Ellison, would have criminalized operation of event-contract trading platforms and was set to take effect in August 2026. Judge Menendez wrote that some event contracts could still be subject to challenge, while granting the injunction halting the ban.
A federal injunction against a state criminal ban gives CFTC-registered platforms a defensive blueprint they lacked. Polymarket and Kalshi can now point to a federal court that rejected outright prohibition, not just narrow licensing requirements. This matters immediately in Wisconsin and Washington, where platforms face parallel state actions without the shield of a favorable federal ruling.
The Minnesota decision does not resolve preemption — Judge Menendez noted some contracts remain challengeable — but it shifts the burden onto states to justify extreme measures rather than forcing platforms to prove federal supremacy case by case. For traders, the ruling reduces the risk that a single state legislature can void positions mid-contract. The next test is whether other federal judges follow Menendez's skepticism toward blanket bans or carve their own paths, leaving the fifty-state map as fragmented as ever.
The Minnesota ruling joins a string of recent state-level clashes over federal preemption — including losses for Kalshi in New York and Washington and a new Wisconsin challenge — that together test whether CFTC-registered platforms can fend off patchwork state prohibitions without a single higher-court ruling.