Kalshi has welcomed a federal court decision granting a preliminary injunction that stops Minnesota from enforcing its new prediction market law while the legal challenge continues. The ruling keeps the status quo in place before the statute’s planned August 1, 2026 start date and marks the latest development in a dispute over whether states can restrict federally regulated event-contract markets.
REACTION TO COURT VICTORY IN MINNESOTA:"Minnesota was the first state to pass a law banning prediction markets, and a court prevented it from being enforced less than two months later." – @Kalshi Spokesperson @ediyork pic.twitter.com/mVbfv0lNbG
— Bill Speros (@billsperos) July 27, 2026In a statement after the decision, Kalshi spokesperson Elisabeth Diana said the ruling confirms that regulation of those markets belongs to federal authorities alone.
“Minnesota was the first state to pass a law banning prediction markets, and a court prevented it from being enforced less than two months later,” Diana said.
“Today’s decision makes it clear: States cannot ban things that they don’t have jurisdiction over. It runs directly against what Congress intended when it gave explicit, exclusive jurisdiction over financial markets to federal regulators, and it hurts the traders and everyday citizens who rely on these markets. We appreciate the court’s thoughtful consideration of this matter.”
Court signals federal law may preempt Minnesota measure against Kalshi
Judge Katherine M. Menendez of the U.S. District Court for the District of Minnesota issued the ruling in consolidated cases involving the United States, the Commodity Futures Trading Commission, Kalshi and QCX LLC, which operates Polymarket US.
She found the plaintiffs had shown a likelihood of success on their argument that the Commodity Exchange Act expressly preempts Minnesota’s prediction market statute, that they faced irreparable harm, and that the balance of harms and public interest favoured temporary relief.
NEW: Federal judge blocks Minnesota's prediction market law, granting a preliminary injunction as Kalshi, Polymarket and CFTC prevail @RWW #predictionMarkets pic.twitter.com/SBd0cb22Dl
— Suswati Basu (@suswatibasu) July 27, 2026The legal battle began after Minnesota lawmakers advanced legislation targeting prediction markets before incorporating it into a broader public safety package. Governor Tim Walz signed the measure in May, making Minnesota the first state to create felony penalties for operating, facilitating, supporting or advertising many categories of prediction markets covering sports, elections, wars, legal proceedings, emergencies and other future events.
Before the law could take effect, Kalshi sued the state, arguing the Commodity Exchange Act gives the CFTC exclusive jurisdiction over qualifying event contracts traded on federally designated contract markets. The company also challenged restrictions on advertising, saying Minnesota could not criminalize speech promoting products permitted under federal law. The CFTC later filed its own challenge, and Polymarket US brought a separate case that was later consolidated.
Minnesota defended the statute by arguing states retain longstanding authority to regulate gambling and protect public welfare. State lawyers cited concerns including gambling addiction, insider trading, market manipulation and public confidence, while maintaining Congress never intended federal commodities law to displace traditional state powers.
Even so, the court stressed the decision is only preliminary. Judge Menendez said the plaintiffs had not yet established that every event contract offered by Kalshi and Polymarket US qualifies as a statutory swap, meaning the eventual scope of any permanent injunction could be narrower after the case is fully heard.
Featured image: Kalshi / Canva
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