A federal judge issued a preliminary injunction on July 27 pausing Minnesota's ban on prediction markets, allowing Kalshi and Polymarket to continue operating while their legal challenge proceeds. Judge Katherine Menendez granted the order, which suspends enforcement of Senate File 3432 as the platforms pursue claims that the state law is preempted by federal authority.
The injunction applies specifically to CFTC-registered designated contract markets. Minnesota enacted SF 3432 to prohibit prediction markets within its borders, but both platforms sued on the ground that state authority over commodity futures trading conflicts with the Commodity Futures Trading Commission's jurisdiction. Menendez's order allows the platforms to operate during the pendency of the federal preemption claim rather than forcing them offline while the case proceeds.
Prediction markets have faced a mixed regulatory path in the United States. The CFTC has registered Kalshi as a designated contract market and granted Polymarket relief from certain licensing requirements. Simultaneously, some states have moved to restrict them. Minnesota's law represented one of the more aggressive state-level efforts to shut down the market entirely rather than regulate its use.
The preliminary injunction is not a ruling on the merits of the preemption claim itself. Menendez determined only that the platforms had shown a likelihood of success on that claim and that they would suffer irreparable harm if forced offline during litigation. The court did not schedule a next hearing date in available public records.
Kalshi has been active in regulatory engagement since its founding in 2021, while Polymarket has operated through Bettor, a CFTC-licensed affiliate, following regulatory clarification earlier this year. Both platforms allow users to trade contracts tied to real-world events including elections, economic data releases, and weather outcomes. The Minnesota case is one of the first instances where state law directly conflicts with federal licensing of a prediction market operator.
The preliminary injunction is a procedural victory that keeps both platforms in the market during litigation but does not resolve whether Minnesota retains authority to impose its own restrictions. Kalshi and Polymarket would still need to prevail on the merits of preemption to secure a permanent injunction or favorable judgment. The case will now proceed on the underlying constitutional question of whether federal CFTC authority displaces state law on prediction markets.
