- A federal judge temporarily blocked Minnesota’s prediction market ban, ruling federal law likely overrides the state measure.
- The injunction allows Kalshi and Polymarket to continue operating, including crypto-linked prediction market activities in Minnesota.
- Prediction markets continued growing in 2026, with monthly trading volume reaching a record $52.8 billion in June.
A federal judge has temporarily stopped Minnesota from enforcing its new prediction market ban, giving Kalshi and Polymarket a legal victory days before the law was due to take effect. According to Reuters, U.S. District Judge Katherine Menendez ruled Monday that federal law likely overrides the state measure, which Governor Tim Walz signed in May, while litigation continues.
Judge Sides With Federal Oversight
Judge Menendez granted a preliminary injunction after Kalshi, Polymarket US, and the Commodity Futures Trading Commission challenged the Minnesota law. The measure would have made operating, hosting, or promoting prediction markets in the state a criminal offense.
According to the ruling, the plaintiffs are likely to succeed in arguing that the Commodity Exchange Act preempts much of the state law. The judge also found that allowing the law to take effect could cause irreparable harm before the case reaches a final decision.
However, Menendez noted the Minnesota statute may not face federal preemption in every application. She cited contracts tied to television programs, including “Love Island,” as examples requiring further legal review.
Crypto Trading Remains Part Of The Case
The ruling also affects crypto-linked trading activity because Polymarket settles margin onchain with stablecoins. Digital asset contracts account for about 20% of Polymarket’s trading volume and roughly 7% of Kalshi’s volume since July 2024, according to Pew Research Center.
Meanwhile, Polymarket has expanded its blockchain infrastructure through its CLOB v2 trading system and its USDC-backed pUSD token. The injunction allows those crypto-related activities to continue in Minnesota while the lawsuit proceeds.
Competition between the platforms has also intensified. According to Token Terminal, Kalshi processed $159.5 billion in cumulative notional volume over five years, compared with Polymarket’s $101.7 billion.
Industry Growth Continues During Legal Fight
Prediction market activity has continued rising throughout 2026. According to Artemis, monthly trading volume remained between $25 billion and $30 billion during the year’s first five months before reaching a record $52.8 billion in June.
July trading also stayed elevated, reaching $50.9 billion month-to-date. According to Galaxy Research, lifetime prediction market volume has now exceeded $150 billion.
The Minnesota case follows similar legal disputes elsewhere. Arizona previously sought criminal action against Kalshi before a federal judge blocked the effort, while Nevada and Utah have also pursued restrictions on prediction market activity.
