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A federal judge has stopped Minnesota from enforcing SF 3432, the first state law aimed at criminalizing prediction markets.
The ruling, issued Monday, grants Kalshi, Polymarket, and the Commodity Futures Trading Commission a preliminary injunction just days before the statute was set to take effect.
U.S. District Judge Katherine Menendez concluded that the plaintiffs were likely to succeed on their express‑preemption claims and that the platforms faced irreparable harm if the law went forward.
Her 44‑page order blocks Minnesota from applying the ban against exchanges registered with the CFTC as designated contract markets, which would have gone live on Aug 1. The injunction will remain in place until the court reaches a final decision on the merits, giving the platforms temporary relief while the broader legal battle continues.
Both parties react to ruling
Kalshi quickly welcomed the injunction, calling it a clear message to states. Spokesperson Elisabeth Diana said, “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. Today’s decision makes it clear: States cannot ban things that they don’t have jurisdiction over.”
She added that the law “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.”
Minnesota’s Attorney General Keith Ellison took the opposite view. He told Courthouse News that the state “respectfully disagree[s]” with the ruling, arguing that the current framework “allows predatory gambling apps to proliferate.”
His memorandum suggested that platforms could meet federal requirements while still limiting what they offer inside Minnesota.
The case has drawn in the Commodity Futures Trading Commission, which has already filed suits against several states, including Illinois, Arizona, Connecticut, Wisconsin, and Minnesota. In fact, the DOJ and CFTC filed their Minnesota challenge within hours of the bill becoming law, with Kalshi joining days later.
Judge Katherine Menendez’s order arrived just before a deadline set by the CFTC.
In a July 24 letter, the agency warned that if no ruling or stay came by close of business Tuesday, it would treat its motion as “constructively denied” and seek relief from the Eighth Circuit.
Kalshi and Polymarket said they would follow the same path if necessary. For now, the injunction gives them breathing room, but the broader fight over prediction markets remains unresolved.
Source: De Crypt
