Minnesota judge stays state's prediction market ban

• Minnesota judge admits that parts of plaintiffs’ complaint against a looming state ban on prediction markets has merit
• The judge has cautioned the plaintiffs that not all aspects of their complaint are likely to succeed
• However, the judge also confirmed that the plaintiffs have established that they may be likely to succeed in proving their core argument in part

Minnesota is only days away from enacting a prediction market ban that was voted on and signed into law earlier this year.

However, the state has hit a new roadblock after a federal judge decided on Monday that Kalshi, one of the main prediction market platforms in the jurisdiction, has provided a convincing argument to secure a temporary injunction against the ban’s enactment.

Minnesota’s prediction market ban will be put on hold

US District Judge Katherine Menendez said that the plaintiffs, this is Kalshi and Polymarket, and the Justice Department and the Commodity Futures Trading Commission have met "their burden to show they are likely to succeed on the merits of their express-preemption claims" in successfully arguing that federal regulation preempts state gaming laws.

The plaintiffs argue that they would suffer irreparable harm if the ban is enacted without further consideration. While Judge Menendez agreed to certain aspects of the argument provided by the plaintiffs, she still commented that "the Minnesota statute may not be preempted in all its applications."

"But the Court finds the state law is likely preempted in many respects. Therefore, temporarily enjoining enforcement of the statute maintains the status quo while enabling further development on this issue and others," she added.

Kalshi and Polymarket have maintained that they are set to experience irreparable harm and that a ban would disrupt a "nationally uniform market," as well as violate First Amendment rights to advertise.

Minnesota is seeking to prohibit the operation of prediction market platforms in the state, effectively ousting Kalshi and Polymarket, which offer sports event and entertainment contracts, with the former accounting for the bulk of the company’s revenue.

Prediction markets face pressure all across the US

Minnesota has gone out on a limb to outright ban the vertical, arguing that it flouted local gaming laws and that prediction markets were indeed a product that took chances, akin to gambling, but did not hold a relevant gaming license, thus making them ineligible in the state.

Other states have also mulled action, among them Massachusetts, Kentucky, New York, and more. Pennsylvania and New Jersey are specifically proposing taxation on the vertical while debating the issue at large.

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