Judge blocks Minnesota's prediction market ban law
A federal court ruling has blocked Minnesota's attempt to become the first US state to ban prediction markets, just before the law was scheduled to take effect. The state may still be allowed to prohibit certain types of wagers.
A federal judge has blocked Minnesota from enforcing a state law that would have banned prediction markets. The ban was set to take effect on August 1, but a preliminary injunction issued by a federal court stopped the law's enforcement just days before its scheduled start.
Minnesota lawmakers viewed prediction markets as indistinguishable from gambling. However, many of these platforms contend they are "swaps," which fall under the regulatory authority of the U.S. Commodity Futures Trading Commission (CFTC). This presents a key legal question regarding whether event contracts can be regulated by the CFTC.
The Trump administration and the two largest prediction market operators, Kalshi and Polymarket, sued Minnesota after the state enacted the law in May. The cases were consolidated, and a ruling issued yesterday imposed a preliminary injunction blocking the law.
While a total ban in Minnesota has now been prevented, the state may still be permitted to prohibit some types of prediction market wagers. This ruling has significant implications for the future of prediction markets in the U.S.