Federal judge temporarily blocks Minnesota law that would ban most bets on prediction markets

A federal judge has temporarily blocked Minnesota from enforcing its law banning most bets on prediction markets, according to court documents filed on Monday.

The Commodity Futures Trading Commission filed a lawsuit in May, asking the federal court to issue a preliminary injunction to stop the law from going into effect on Aug. 1. The federal agency described the statute as the most aggressive move by any state to shut down CFTC-regulated markets and undermine the federal regulatory framework Congress established more than 50 years ago. 

Judge Katherine Menendez granted the injunction on Monday, effectively allowing the platforms to carry on in Minnesota while legal proceedings between state and federal officials continue. According to the order, the federal agency, along with the prediction markets Kalshi and Polymarket, allege that the Commodity Exchange Act overrides Minnesota's law because the federal statute gives the CFTC  "exclusive jurisdiction" to regulate the type of event-contract transactions offered by both companies.

"It appears likely that the Minnesota law will regulate transactions over which the CFTC has 'exclusive jurisdiction,'"  the order said.

The Minnesota law, which Gov. Tim Walz signed in May, explicitly outlaws wagers on topics including sports, weather, popular culture events, war and death. It also prohibits advertising of prediction markets in the state.

The Minnesota Senate passed the legislation 56-10 on April 30.

The attached video first aired on May 19.