A federal judge has blocked Minnesota's law that would have made it the first US state to ban prediction markets, granting a preliminary injunction just days before the ban was due to take effect on 1 August. The ruling came after the Trump administration and the two largest prediction-market platforms, Kalshi and Polymarket, sued the state following its enactment of the law in May, arguing that federal regulators alone have authority over these markets.

US District Judge Katherine Menendez found that Minnesota's outright ban likely conflicts with federal law, since many trades on Kalshi and Polymarket qualify as "swaps" under the Commodity Exchange Act, placing them under the exclusive jurisdiction of the Commodity Futures Trading Commission. However, she indicated Minnesota could still be entitled to prohibit certain event contracts that don't meet the legal definition of swaps, such as bets on the outcome of reality show Love Island USA. Minnesota Attorney General Keith Ellison said he would continue defending the law, calling prediction markets "predatory gambling," though he stopped short of confirming an appeal.