Kalshi, Polymarket Granted Federal Court Preliminary Injunction, Minnesota Prediction Market Ban Suspended

According to CoinDesk, U.S. District Court Judge for the District of Minnesota Katherine Menendez ruled on July 28 local time that the Minnesota state law criminalizing the operation of prediction markets likely violates the federal Commodity Exchange Act (CEA), and granted a preliminary injunction to Kalshi, Polymarket, and the U.S. Commodity Futures Trading Commission (CFTC) to suspend the enforcement of the state law. The judge held that prediction market contracts structurally fall under 'swap' products within the CFTC's regulatory scope, federal law takes precedence over state law, and the three plaintiffs are 'likely to prevail in the formal trial'. Additionally, the judge noted that failing to suspend the enforcement of the law would cause 'irreparable harm' to Kalshi and Polymarket. The preliminary injunction will remain in effect until the final judgment of the case is issued.