Minnesota's Kalshi ban: Judge blocks prediction market ban from taking effect
Prediction markets ban to go in effect Aug. 1
On August 1 Minnesota will become the first state to ban prediction markets. The ban makes operating and advertising prediction markets a felony.
ST. PAUL, Minn. (FOX 9) - As the law faces challenges from the Trump administration, Polymarket, and Kalshi, a judge has issued a preliminary injunction blocking Minnesota from instituting a ban on prediction markets.
Minnesota bans prediction markets
The backstory:
Gov. Walz signed a bill to ban prediction markets in May after the legislation was approved by the legislature near the end of the session. That law was due to go into effect on August 1 along with a batch of other new state laws.
Following the signing, lawsuits were brought by the U.S. Commodity Futures Trading Commission (CFTC), Polymarket, and Kalshi challenging the law. The CFTC argued only the federal government had the authority to regulate derivatives markets and futures trading.
Local perspective:
Federal officials also argued that Minnesota's law was written in such a way that it would potentially outlaw "event contracts" on the designated contract markets (DCMs). Officials say those contracts essentially allow farmers to hedge against weather events that could impact their crops.
Minnesota's law explicitly outlaws prediction market bets on short-term weather events, but lawmakers were careful to include carveouts for tools farmers use like crop futures contracts.
In their motion, Kalshi and Polymarket also argue that Minnesota's law banning prediction market advertisements is a violation of the First Amendment.
Preliminary injunction issued
What we know:
On Monday, a judge granted a motion for a preliminary injunction to block Minnesota's law from going into effect.
In the ruling, the judge writes, "until a final decision on the merits is reached in these cases," the state is blocked from enforcing the law.
What they're saying:
In a statement, Attorney General Keith Ellison reacted to the injunction by saying:
"Prediction markets are gambling, plain and simple, and Minnesota has every right to keep predatory gambling out of our communities. We respectfully disagree with the Court's determination that the proper ‘status quo’ to maintain is one that allows predatory gambling apps to proliferate. However, we also acknowledge that the Court has been presented with complex legal issues that are difficult to decide quickly and without a fully developed record. We look forward to continuing to litigate this case and defend the State's duly passed law."