Judge blocks first state law that would have banned prediction markets - Ars Technica

What the report says

Ars Technica reported that a federal judge has temporarily blocked Minnesota from enforcing what was described as the first state law to broadly ban prediction markets. The law, enacted in May and set to take effect on August 1, was challenged by the Trump administration and the two largest prediction-market platforms, Kalshi and Polymarket. U.S. District Judge Katherine Menendez in Minnesota issued a preliminary injunction while the consolidated cases continue.

The dispute centers on whether event contracts offered by prediction markets fall under federal commodities law as “swaps,” which would place them under the exclusive authority of the U.S. Commodity Futures Trading Commission. Menendez found that the challengers were likely to succeed at least in part, because some contracts on Kalshi and Polymarket appear tied to financial, economic or commercial consequences and therefore may be federally regulated.

The ruling does not end the case or fully validate the platforms’ position. Ars reported that Menendez indicated Minnesota may still be able to restrict some event contracts that do not meet the legal definition of swaps, such as wagers tied to entertainment outcomes including Love Island USA or broadcast remarks during World Cup games. By contrast, she cited examples such as elections, sports-team signings, World Cup outcomes and Strait of Hormuz traffic as contracts that may have clearer economic implications.

Minnesota Attorney General Keith Ellison said the state disagrees with the ruling and will continue defending the law, calling prediction markets gambling. The case matters because states and federal regulators are increasingly clashing over whether prediction markets should be treated like gambling products or federally regulated financial contracts, an issue courts have not resolved uniformly.