A judge blocks the first federal law that would have banned prediction markets

Minnesota, the first US state to ban prediction markets, was blocked from enforcing the law by a federal court ruling just days before the ban was to take effect. But while Minnesota has stopped short of enforcing a total ban, the state may be allowed to ban certain types of market bets.

The Trump administration and two major marketplaces – Kalshi and Polymarket – sued Minnesota after the state he introduced the law in May. The cases were consolidated, and a control which was issued yesterday issued a preliminary injunction against the law which was due to take effect on 1 August.

Legislators in Minnesota have seen the futures markets as indistinguishable from gambling, but the US Commodity Futures Trading Commission (CFTC) argues that it has sole authority to regulate platforms under state law. One of the legal questions is whether futures contracts are “swaps,” which are regulated by the CFTC.

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