A federal judge has temporarily blocked Minnesota’s first-in-the-nation law banning prediction markets just days before it was to take effect, keeping Kalshi and Polymarket operating while the legal fight plays out in court. U.S. District Judge Katherine Menendez in Minnesota found that the U.S. Commodity Futures Trading Commission, Kalshi and Polymarket were likely to succeed in their challenge to the law and that letting it take effect would cause “irreparable harm” to the operators.
The state had set the law to take effect Saturday. It would have made it a crime to create or operate prediction markets or help administer nearly any activity connected to one. For now, that threat stays on ice. The law will remain blocked while the lawsuit proceeds.
Who Gets to Decide
Kalshi, Polymarket and the Commodity Futures Trading Commission want the law permanently blocked and argue that federal law gives the CFTC exclusive jurisdiction to regulate the type of “event-contract transactions” offered by Kalshi and Polymarket. That’s the core of the fight: one layer of authority claiming the right to rule, another insisting it can still police the same activity under gambling laws.
States argue that the vast majority of the business on prediction market platforms is sports betting, which they are empowered to regulate, and that it is completely different from the commodities and futures contracts that the commission has historically regulated. The dispute is less about ordinary people and more about which bureaucracy gets to collect the power, define the rules, and decide who can operate.
Minnesota Attorney General Keith Ellison said in a statement Tuesday that prediction markets are “gambling, plain and simple.” “And Minnesota has every right to keep predatory gambling out of our communities,” Ellison said. He said his office disagrees with the court’s decision that the “proper ‘status quo’ to maintain is one that allows predatory gambling apps to proliferate,” but said the legal issues are complex and that he planned to continue defending the state’s law.
The Fight Over Control
Neal Kumar, Polymarket’s chief legal officer, said in a statement that the decision makes clear that prediction markets on commission-registered exchanges “are governed by federal law, not a patchwork of state rules.” A Kalshi spokesperson, Elisabeth Diana, said that “states cannot ban things that they don’t have jurisdiction over.”
That’s the language of the system talking to itself. Federal law, state law, jurisdiction, exclusive authority. Ordinary people are left to watch institutions argue over who gets to regulate the market while the market keeps running.
Menendez’s decision follows a declaration in February by Trump’s appointee atop the Commodity Futures Trading Commission that the agency “will no longer sit idly by” while states aim to regulate or ban prediction markets and “undermine the agency’s exclusive jurisdiction.” The message was plain. The agency wants its turf.
A tangle of lawsuits is growing as states try to use their gambling laws to shut down Kalshi, Polymarket and other prediction market operators, declaring them to be unlicensed and illegal gambling operators. In April alone, the federal government sued Connecticut, Arizona and Illinois, challenging their efforts to regulate prediction market operators, while New York sued Coinbase and Gemini, two of the newest players in the prediction market industry.
Who Pays for the Turf War
The American Gaming Association, which represents commercial casinos, estimates states have lost more than $1.2 billion in tax revenue from wagers since prediction markets began offering sports event contracts. Native American tribal leaders and gambling regulators also contend that betting on things like sporting events, elections and other outcomes is unlawful gambling.
That’s the hierarchy at work: industry groups, regulators and state officials fighting over revenue, jurisdiction and control, while the people caught in the middle are treated as a problem to be managed. The language shifts between “tax revenue,” “illegal gambling operators” and “predatory gambling,” but the structure stays the same. Power wants the right to name the game.
In the meantime, the Commodity Futures Trading Commission has begun a rulemaking process to consider what sorts of event contracts it would consider to be “contrary to the public interest” and bar them from being listed through a prediction market that it regulates. Another round of rules. Another round of permission slips. The apparatus keeps moving, and the people affected get to wait while the lawyers and agencies sort out who owns the cage.