Minnesota’s new law criminalizing prediction markets and their collaborators has been put on hold, meaning it won’t go into effect this Saturday, August 1st. Earlier this week, US District Court (Minneapolis) Judge Katherine Menendez ruled that the Commodity Exchange Act (CEA) likely preempts state authority over markets that are federally regulated.
The preliminary injunction allows prediction markets to continue their operations as normal in the state of Minnesota. The actual merits of the case will be heard at a later date in the same US District Court for the District of Minnesota. Plaintiffs in the case are listed as the CFTC, Kalshi, and Polymarket.
READ: US District Court Preliminary Injunction against Minnesota (July 27, 2026)
Minnesota’s law, criminalizing prediction markets and their collaborators, is seen by some legal experts as a strategic mistake, one that enables prediction exchange proponents to “drag” states into federal court.
Miami Law School professor and Forbes contributor Daniel Wallach is one such expert. Wallach believes that states should instead opt to pursue legal actions against prediction markets in state courts, which are more likely to give priority to state-sponsored restrictions and regulations on gambling activities.
Had the US District Court not stepped in with a preliminary injunction, Minnesota’s new law on prediction markets would have gone into effect this Saturday, August 1st. It would have made it a felony to operate or collaborate with any prediction exchange that offers contracts to residents and visitors located within Minnesota’s borders.
“It took only two months for a federal judge to stop Minnesota from enacting this law,” stated Kalshi CEO Tarek Mansour in an X post on Tuesday. “They tried to ban prediction markets, turn users into felons, and criminalize service providers. The worst part: the rationale used to ban prediction markets could be broadly applied to any financial market with speculation, which means all financial markets.”
Mansour added that “the upside here is unclear: make the casino lobby happy? The downside is obvious: limit competition, create chaos, and hurt the consumers they’re trying to protect. States can’t just go around banning things they don’t have jurisdiction over. If the real concern is about taxes or consumer protection, there are better ways to address that and we’re open to chat.”
North Carolina’s fiscal budget, which has already been passed, will tax prediction market transaction fees associated with traders who are located in the state at a flat rate of six percent. As a result, North Carolina has officially become the first state to acknowledge CFTC’s exclusive oversight of prediction markets including Kalshi, Underdog, Novig, and others.
Earlier this week, Pennsylvania House members introduced HB 2711, which would enforce civil penalties for prediction markets that fail to comply with regulations that include a minimum age threshold of 21 along with a ban on market-maker activities for businesses and individuals who are engaged in “gaming” activities anywhere in the United States.
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