Kalshi and Polymarket get pause on Minnesota prediction market ban
A federal judge in Minnesota granted a preliminary injunction blocking the state’s newly passed ban on prediction market operators, ruling the law is likely preempted by the federal Commodity Exchange Act.
Judge Katherine Menendez said Kalshi and Polymarket, along with the U.S. Commodity Futures Trading Commission (CFTC), are likely to succeed in showing that Minnesota’s statute conflicts with the CFTC’s jurisdiction over these contracts when they are structured as “swaps” under the CEA.
Kalshi and Polymarket sued Minnesota earlier this year after the state criminalized operating prediction markets. The judge noted some contracts could fall within the ban—for example, event bets tied to outcomes like who wins “Love Island”—but it would be difficult to tailor a preliminary halt only to those specific issues.
The injunction will remain in place until a final decision on the merits. The court also cited the risk of “irreparable harm” to Kalshi and Polymarket if the ban proceeds during the litigation.
For crypto traders, this is relevant because Kalshi and Polymarket represent on-chain/crypto-adjacent prediction-market infrastructure, and the ruling could reduce near-term regulatory uncertainty for this niche trading segment—though it does not resolve the full case yet.
Neutral
The ruling is primarily a legal/regulatory development for prediction markets rather than a direct change to crypto asset fundamentals. A preliminary injunction reduces near-term legal risk for Kalshi and Polymarket, which can be modestly supportive for participation and sentiment in crypto-adjacent event-trading markets. However, the case is not decided on the merits yet, so outcomes remain uncertain.
Historically, when courts pause state-level restrictions while federal preemption questions are litigated, markets often see short-term relief from headline risk but limited durable impact until final rulings. For traders, this can mean calmer sentiment around prediction-market liquidity and fewer “sudden exit” fears in the near term, while broader market moves for majors (BTC/ETH) are likely dominated by macro and crypto-native catalysts.
Net effect: likely neutral for overall crypto market stability, with localized potential upside for prediction-market operators’ regulatory confidence.