United States v. State of MinnesotaUnited States v. State of Minnesota
- Reporters:
- Before:
- Katherine Menendez
To Minnesota lawmakers, this arrangement sounds a lot like gambling. Concerned about the negative effects that such transactions have on their constituents, Minnesota lawmakers passed a law prohibiting the creation, operation, and advertising of prediction markets in the state. That law is scheduled to take effect on August 1, 2026. It imposes criminal penalties for those operating prediction markets and engaging in other activities supporting those markets.
These matters are before the Court on the Plaintiffs’ motions for preliminary injunctive relief. CFTC (Dkt. 24); Kalshi (Dkt. 21); Polymarket (Dkt. 19).4 As explained below, Plaintiffs’ motions are granted. The Court finds that Plaintiffs have met their burden to show they are likely to succeed, at least in part, on their express-preemption claims, that they face a threat of irreparable harm, and that the balance of harms and the public interest
BACKGROUND
Futures Markets and Event Contracts
This case involves a dispute over the proper scope of the CFTC‘s regulation of derivatives markets.5 A derivative is a “financial instrument or contract whose price is directly dependent upon (i.e., derived from) the value of one or more underlying assets—for example, commodities (like corn and wheat), securities, or debt instruments.” KalshiEx LLC v. Commodity Futures Trading Commission, No. 23-cv-3257-JMC, 2024 WL 4164694, at *1 (D.D.C. Sep. 12, 2024) [hereafter “CFTC D.D.C.“] (cleaned up); see also Derivative, Futures Glossary. “Derivatives include futures, options, and swaps,” and “[t]hey are used to hedge risk or to exchange a floating rate of return for [a] fixed rate of return.” Derivative, Futures Glossary.
An event contract is a type of derivative where the possible payoff is “based on a specified event, occurrence or value.” KalshiEx LLC v. Martin, 793 F. Supp. 3d 667, 671
The CEA and Creation of the CFTC
The CEA was first passed in 1936 to regulate derivatives markets, and it has been amended several times since then.
The CEA defines the scope of the CFTC‘s authority. In general, it states that the CFTC “shall have exclusive jurisdiction . . . with respect to accounts, agreements . . ., and
Except as hereinabove provided, nothing contained in this section shall (I) supersede or limit the jurisdiction at any time conferred on . . . regulatory authorities under the laws . . . of any State, or (II) restrict . . . such other authorities from carrying out their duties and responsibilities in accordance with such laws. Nothing in this section shall supersede or limit the jurisdiction conferred on courts of the United States or any State.
Dodd-Frank Act
Congress exempted most “over-the-counter”6 derivatives or swaps from regulation by the CFTC in the Commodities Futures Monetization Act of 2000. S. Rep. No. 111-176, at 29 (2010). In 2010, Congress enacted the Dodd-Frank Act in response to the financial crisis of 2008, which was attributed, in large part, to the unregulated market for swaps.
The Dodd-Frank Act also added a “special rule” that gives the CFTC the power to prohibit certain event contracts or swaps that the CFTC concludes are contrary to the public interest.
The CFTC issued a regulation, effective in 2011, that exercised its rulemaking authority under the special rule. That regulation provides that a regulated DCM is prohibited from listing “[a]n agreement, contract, transaction, or swap based upon an excluded commodity, as defined in Section 1a(19)(iv) of the Act, that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under
However, on February 6, 2026, the CFTC withdrew the 2024 Notice of Proposed Rulemaking. CFTC, Withdrawal of Proposed Regulatory Action – Event Contracts, 91 Fed. Reg. 5386, 5387 (Feb. 6, 2026) (“The Commission is withdrawing these proposed rules to reconsider them in light of various forms of state regulatory actions and litigation concerning the Commission‘s exclusive jurisdiction over event contract derivatives listed on designated contract markets[.]“). The following month, the CFTC issued an Advanced Notice of Proposed Rulemaking seeking public comment about the factors it should
As prediction markets and online trading in event contracts have exploded in popularity in recent months, Minnesota lawmakers grew concerned that many event contracts were indistinguishable from gambling, raising the potential for both manipulation and the negative effects of problem gambling, particularly for young people. CFTC (Dkt. 36 at 13 (quoting comments of a proponent of Minnesota‘s prediction market statute).) Against that backdrop, Minnesota lawmakers enacted the prediction market statute that Plaintiffs now seek to enjoin.
The prediction market statute defines “prediction markets” as follows:
(e) “Prediction market” means a system that allows consumers to place a wager8 on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract for:
(1) an athletic event or game of skill, or portions thereof or individual performance statistics therein;
(2) any game played with cards, dice, equipment, or any mechanical or electronic device or machine;
(3) war, state or national emergencies, human-made disasters, mass shootings, acts of terrorism, or public health crises, or the ancillary effects thereof;
(4) any event or events happening to a natural person or group of people;
(5) a federal, state, or local election, or the specific decisions of the federal, state, or local government and the government‘s agencies, employees, and officers, the
primary underlying characteristic of which is not financial, commercial, or economic or the outcome is under the complete control of any person or the outcome is known by any person in advance. This prohibition applies to event contracts on the specific action or decision itself and does not apply to the resulting consequences of such actions or decisions;
(6) legal actions, including but not limited to a civil or criminal suit, grand jury action, jury trial, settlement, plea, or conviction;
(7) the death, assassination, or attempted killing of a person or group of persons, or mass casualty events;
(8) events in popular culture, including but not limited to awards and the date a piece of entertainment will be released; or
(9) whether a person will make a particular statement.
The Minnesota law imposes criminal liability for a variety of conduct involving prediction markets. If a person does any of the following, she is guilty of a felony:
(1) creates a prediction market;
(2) operates, manages, or controls a platform or system intending that consumers will use the platform or system to make wagers in a prediction market;
(3) intentionally facilitates the operation of a prediction market by:
(i) identifying or listing events knowing the events will be used by consumers to make wagers;
(ii) accepting, holding, or directing the disposition of funds or other things of value for the purpose of allowing consumers to make wagers or to settle wagers made by consumers;
(iii) determining, administering, or enforcing the terms, pricing, or settlement of wagers made by consumers;
(iv) regularly or continuously acting as a counterparty to wagers made by consumers by entering into a wager, offering to enter into a wager, or taking a temporary position in a wager that may be replaced by a different consumer; or
(v) setting or adjusting the prices, odds, or terms that apply to wagers entered into by consumers;
(4) provides data, information, or verification services, including the provision of event outcomes, directly to a prediction market knowing that the data, information, or verification services will be used to allow consumers to make wagers or to settle wagers made by consumers in violation of this section; or
(5) provides supportive services to a prediction market knowing that the services will be used to identify a consumer‘s location, transfer funds, or make or process payments for the purpose of allowing consumers to make wagers or to settle wagers made by consumers in violation of this section.
Kalshi and Polymarket US are financial services companies that operate derivatives exchanges and prediction markets where users can buy and sell event contracts. Kalshi (Dkt. 1 ¶ 18); Polymarket (Dkt. 1 ¶ 17). Kalshi and Polymarket US operate nationwide DCMs, and each has received CFTC approval to do so following registration. Kalshi (Dkt. 25 ¶ 5); Polymarket (Dkt. 1 ¶ 52; Dkt. 22-3).10
Polymarket US lists event contracts for a variety of “real-world events of public interest,” including contracts predicting which political party will control the chambers of Congress following the November 3, 2026 elections and which National Football League team will win the Super Bowl. Polymarket (Dkt. 1 ¶¶ 53, 55–56). Other examples of event contracts listed by Polymarket US include:
- “program host contracts” where users risk money predicting whether a specific person will host a particular show during a designated time period;
- “solar event contracts” such as predicting whether and when solar flares or geothermal storms will occur;
- “title award contracts” that depend on predictions of who will win an award, such as the Oscar for best actor;
- “event mention contracts” that pay out if a speaker at an identified event mentions a word or phrase or says it a specific number of times; and
“participant attend contracts” which hinge on whether an identified person attends a specified event.11
Kalshi‘s “platform currently allows users to trade on[, for example,] the level of US GDP growth in Q2 2026, the closing price of the S&P 500 at the end of 2026, whether India will meet its 2030 climate goals, whether the market share for electric vehicles will be above 50% in 2030, or when the Strait of Hormuz will open.” Kalshi (Dkt. 1 ¶ 62). “Kalshi also offers contracts on congressional votes, weather events, technological benchmarks, markers of cultural influence, and Federal Reserve interest rate decisions.”12 Both Kalshi and Polymarket US also offer users the opportunity to purchase sports-related event contracts on point spreads, player statistics, and many other game details. See KalshiEx LLC v. Flaherty, 172 F.4th 220, 232 (3rd Cir. 2026) (Roth, J., dissenting).
DCMs are required to submit new types of contracts they want to list on their exchanges to the CFTC for approval. “For ‘a new contract or other instrument,’ approval by the [CFTC] is required, although by statute the [CFTC] ‘shall approve’ a new event contract or other instrument unless the Commission concludes it violates the CEA or regulations.” Martin, 793 F. Supp. 3d at 673 (quoting
Plaintiffs’ Claims
The CFTC, Kalshi, and Polymarket US filed these cases in response to Minnesota‘s enactment of the prediction market statute. There is no real dispute that Kalshi and Polymarket US operate prediction markets within the meaning of the Minnesota law. Nor is there any dispute that Kalshi and Polymarket US engage in advertising and marketing to promote prediction market transactions that would violate the Minnesota statute. See, e.g., Kalshi (Dkt. 1 ¶ 2). All three Plaintiffs raise identical preemption claims in their complaints, asserting that the Minnesota law is preempted by the CEA. They assert that the Minnesota prediction market statute is expressly preempted by the CEA‘s conferral of “exclusive jurisdiction” on the CFTC for transactions involving swaps.
In addition, Kalshi and Polymarket US claim that Minnesota‘s prediction market statute violates their First Amendment rights in two ways. First, both argue that the law burdens their free speech rights by prohibiting them from advertising and marketing their prediction markets. Polymarket (Dkt. 1 ¶¶ 115–17); Kalshi (Dkt. 1 ¶¶ 87–96). Second, Polymarket US claims that because Minnesota‘s prediction market statute targets those who knowingly provide data or verification services to a prediction market to enable wagers prohibited by the state law, the statute burdens Polymarket US‘s First Amendment right to receive and communicate truthful information about its products. Polymarket (Dkt. 1 ¶¶ 118–20).
DISCUSSION
I. Preliminary Injunction Standard
“A preliminary injunction is an extraordinary remedy[.]” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). A district court has “broad discretion” in determining whether to issue a preliminary injunction. Entergy, Ark., Inc. v. Nebraska, 210 F.3d 887, 898 (8th Cir. 2000) (quoting United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998)). A party seeking to obtain a preliminary injunction must demonstrate that the Dataphase13 factors favor injunctive relief: (1) the movant‘s likelihood of success on the merits; (2) irreparable harm to the movant without injunctive relief; (3) a balance of the
II. Likelihood of Success on the Merits
The likelihood of success on the merits is considered the “most important” factor in assessing a motion for preliminary injunctive relief. Jet Midwest Int‘l Co., Ltd. v. Jet Midwest Gr., LLC, 953 F.3d 1041, 1044 (8th Cir. 2020) (quoting Roudachevski v. All-Am. Care Ctrs., Inc., 648 F.3d 701, 706 (8th Cir. 2011)). Generally, to meet its burden on this factor the moving party must show a “fair chance of prevailing, . . . but it need not show that it has a greater than fifty per cent likelihood of success[.]” Sleep Number Corp. v. Young, 33 F.4th 1012, 1016–17 (8th Cir. 2022) (cleaned up); see also Wilbur-Ellis Co., LLC v. Jens, 139 F.4th 608, 611 (8th Cir. 2025) (same). However, if the moving party seeks to “enjoin enforcement of a validly enacted statute, they must establish as a threshold matter that they are ‘likely to prevail on the merits.‘” 1-800-411-Pain Referral Serv., LLC v. Otto, 744 F.3d 1045, 1053–54 (8th Cir. 2014) (quoting Planned Parenthood Minn., N.D., S.D. v. Rounds, 530 F.3d 724, 732 (8th Cir. 2008) (en banc)); Minn. Chamber of Comm. v. Choi, 707 F. Supp. 3d 846, 857 (D. Minn. 2023) (same). This standard requires a “more rigorous threshold showing” than the ordinary fair-chance-of-prevailing metric, and it “is designed ‘to ensure that preliminary injunctions that thwart a state‘s presumptively reasonable
A. CFTC‘s Standing
Defendants contend that the CFTC‘s motion for preliminary injunction should be denied because the CFTC is unlikely to show that it has standing to bring its preemption claims.15 To establish Article III standing for declaratory and injunctive relief, the CFTC must show that it (1) faces an imminent threat of an injury in fact,16 (2) that is traceable to the Defendants, and (3) that could be redressed by a court order. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). “At the preliminary injunction stage, . . . the plaintiff must make a ‘clear showing’ that she is ‘likely’ to establish each element of standing.” Murthy v. Missouri, 603 U.S. 43, 58 (2024) (quoting Winter, 555 U.S. at 22). When assessing standing in this context, the Court assumes the CFTC‘s allegations are true
The issue here concerns the injury-in-fact requirement. “To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.‘” Spokeo, Inc. v. Robins, 578 U.S. 330, 339 (2016) (quoting Lujan, 504 U.S. at 560). “The United States has a legally protected interest in enforcing federal law.” United States v. Missouri, 114 F.4th 980, 984 (8th Cir. 2024). “Interference with the federal government‘s interest in enforcing federal law is sufficient to establish that [a state law‘s] implementation injured the United States.” Id. at 985.
For purposes of its motion for preliminary injunctive relief, the CFTC has sufficiently demonstrated an imminent threat of an injury in fact. At least one other court has reached that conclusion under similar circumstances. KalshiEX LLC v. Johnson, No. CV-26-01715-PHX-MTL, 2026 WL 1223373, at *3 (D. Ariz. May 5, 2026) (concluding at the preliminary injunction stage that the CFTC “has standing to seek to enjoin Arizona‘s enforcement of its gambling laws against event contracts traded on DCMs“).
Defendants argue that the United States’ and the CFTC‘s interest in enforcing federal law is too amorphous to constitute an injury in fact. Instead, Defendants argue that the United States must allege “concrete harm to federal agency operations or direct violation of federal law” and has failed to do so. CFTC (Dkt. 36 at 25). The Court disagrees. Even if the CFTC must demonstrate concrete interference with agency operations, at this preliminary stage, the CFTC has done enough to meet that burden. See Murthy, 603 U.S.
Joshua Beale, the Acting Director of the CFTC‘s Division of Market Oversight (“DMO“), states the following:
[He is] responsible for supervising DMO staff who have received requests for guidance from a DCM in the wake of recent court decisions requiring compliance with State-specific gambling laws and regulations. For example, DMO and CFTC staff have received requests for guidance as to appropriate steps to comply with the CEA and CFTC regulations, to the extent possible, while subject to court orders requiring compliance with state gambling laws. DMO and other CFTC staff have devoted resources to assessing steps DCMs and other CFTC-registered entities may need to take to maintain compliance with the CEA and CFTC regulations. Those resources have necessarily been diverted from core functions of the CFTC, including supervising DCMs and other markets. Steps taken by State authorities to enforce State gambling laws against CFTC regulated DCMs has complicated CFTC oversight of DCMs and other CFTC-registered entities.
CFTC (Dkt. 25-1 ¶ 7); see also CFTC (Dkt. 1 ¶ 13 (alleging the same)). Defendants have not introduced evidence to controvert the agency‘s showing, and they identify no authority for the idea that the described injury is insufficient for standing. Under these circumstances, the Court finds that the United States and the CFTC have made an adequate showing that they are likely to establish an injury in fact. Cf. Missouri, 114 F.4th at 984 (finding the United States had sufficiently alleged an injury in fact where it presented “uncontroverted evidence that implementation of the [state law] impaired” the government‘s interest in
Defendants also argue that the United States lacks standing to sue to enjoin enforcement of an arguably preempted state law unless the challenged statute involves a direct violation of federal law, but again they point to no clear authority for this proposition. For example, relying on United States v. Missouri, Defendants contend that a “direct violation of federal law” is needed to show injury-in-fact because the Missouri law at issue there “purported to invalidate federal law,” making the “interference with federal law sufficiently high to establish standing.” CFTC (Dkt. 36 at 25). But the Eighth Circuit‘s articulation of the federal government‘s interest in enforcing its own laws is broader than that. Missouri, 114 F.4th at 984 (“The United States has a legally protected interest in enforcing federal law.“). And equating the requirement of injury with the need to identify a direct violation of federal law risks conflating the Article III concept of injury in fact with the merits. See id. at 985 (“Interference with the federal government‘s interest in enforcing federal law is sufficient to establish that the Act‘s implementation injured the United States. Whether the United States is entitled to relief from that injury is a question on the merits of the dispute.“).
For these reasons and at this stage, the CFTC has shown that it is sufficiently likely to establish the injury-in-fact element of standing, and the CFTC‘s motion for a preliminary injunction should not be denied for failure to meet its burden.
Plaintiffs assert that they are likely to succeed on the merits of their claims that the
As explained below, the Court finds that Plaintiffs have met their burden to show they are likely to succeed on the merits of their express-preemption claims, at least as to the application of Minnesota‘s law to many of the trades listed on Kalshi‘s and Polymarket US‘s platforms. Specifically, it appears that whether the Minnesota statute is expressly preempted turns on whether the state law attempts to regulate trades in event contracts that qualify as “swaps” within the meaning of the
1. Express Preemption
“Express preemption occurs where a federal law explicitly prohibits or displaces state regulation in a given field.” Johnson v. MFA Petroleum Co., 701 F.3d 243, 248 (8th Cir. 2012); In re Aurora Dairy Corp. Organic Milk Mktg. & Sales Pracs. Litig., 621 F.3d 781, 792 (8th Cir. 2010) (“Express preemption exists where Congress uses explicit pre-emptive language to express its purpose.“) (quotation omitted). When Congress has expressly preempted state legislation, courts do not apply any “presumption against pre-emption.” Bio Gen LLC v. Sanders, 142 F.4th 591, 600 (8th Cir. 2025) (quoting Watson v.
Exclusive Jurisdiction
Plaintiffs’ express-preemption claims find support in the text of the
As an initial matter, courts have recognized that
While
Except as hereinabove provided, nothing contained in this section shall (I) supersede or limit the jurisdiction at any time conferred on the Securities and Exchange Commission or other regulatory authorities under the laws of the United States or of any State, or (II) restrict the Securities and Exchange Commission and such other authorities from carrying out their duties and responsibilities in accordance with such laws.
Nothing in this section shall supersede or limit the jurisdiction conferred on courts of the United States or any State.
Broad Definition of “Swap”
Plaintiffs’ express preemption claims also find textual support in the language Congress used to define what constitutes a “swap.”
The Court‘s initial focus, therefore, is on determining whether the transactions at issue make payment dependent on the “occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.”
The
The term “potential” performs a similar role in the definition of “swap.” In the context of the statutory definition, the event in question must be connected to a ”potential financial, economic, or commercial consequence.”
In sum, these statutory terms support Plaintiffs’ express preemption claims. Defendants do not really take issue with the plain meaning of the words Congress used in
First, Defendants’ effort to limit the scope of the CFTC‘s jurisdiction to trades that focus on traditional commodities futures ignores the plain language of the statutory
Also weighing in the Plaintiffs’ favor at this preliminary stage is the fact that Congress enacted the “special rule” as part of the Dodd-Frank Act of 2010. That rule gives the CFTC the discretionary authority to prohibit six categories of event contracts listed on DCMs if the CFTC concludes they are “contrary to the public interest.”
In combination with the congressional decision to give the CFTC exclusive jurisdiction over swaps, allowing the CFTC to either permit event contracts in these categories or declare them contrary to the public interest suggests, at least preliminarily, that Congress intended DCM-based transactions over these prediction markets to be governed by the CFTC. See Flaherty, 172 F.4th at 231 (observing that the
The Court‘s preliminary conclusion also finds support in recent caselaw. In particular, the Court finds persuasive the analysis from several courts that have examined the scope of the
Interplay Between the CEA and the Prediction Market Statute
Based on the record in this case and on publicly available information, at least some of the event contracts that Kalshi and Polymarket US list on their platforms make payment contingent on the occurrence of events that are likely to be associated with potential financial, economic, or commercial consequences. Therefore, such event contracts appear to qualify as transactions involving “swaps” over which the CFTC has exclusive jurisdiction. And the Minnesota prediction market statute would prohibit Kalshi and Polymarket US from offering trades in swaps that the
The event contracts on Plaintiffs’ platforms include transactions that pay out depending on the outcome of a variety of events, including: athletic events and games of skill, and portions of those games or individual participants’ performances; events that happen to individuals and groups of people; elections and decisions of government bodies and their agencies; legal actions; events in popular culture; and whether specific people
Therefore, it appears likely that the Minnesota law will regulate transactions over which the CFTC has “exclusive jurisdiction.”
Making the issues more complex, the Court also notes that not all the trades offered by Kalshi and Polymarket US appear to fit the
Regrettably, although the briefing from all parties here is excellent, both sides have treated the issues before the Court as all-or-nothing propositions—either the
Overall, at this stage, all the questions relevant to the merits of the Plaintiffs’ preemption claims have certainly not been answered. But for now, Plaintiffs have shown that the
2. Implied Preemption and First Amendment Claims
Because Plaintiffs have shown they are likely to succeed on the merits of their express-preemption claims and are otherwise entitled to preliminary injunctive relief, the Court finds it unnecessary to address, at this stage, whether Plaintiffs are also likely to prevail on their implied-preemption argument or their First Amendment claims. The First Amendment claims presented by Kalshi and Polymarket US have not arisen in the dozen or so other prediction-market cases explored by the parties. And the questions raised are complex. Similarly, the implied preemption arguments raised as alternative bases to invalidate Minnesota‘s law present closer questions than the express preemption issue explored above. And other courts have reached different conclusions on whether state gambling laws are impliedly preempted as applied to markets like Kalshi and Polymarket US. Compare Flaherty, 172 F.4th at 228–32 (finding Kalshi was likely to succeed on the merits of its claim that the
III. Irreparable Harm
A showing of irreparable harm is also necessary to obtain a preliminary injunction. See Choreo, LLC v. Lors, 164 F.4th 667, 671 (8th Cir. 2026) (explaining that a movant‘s failure to show irreparable harm is “an independently sufficient basis” to deny a preliminary injunction) (quotation omitted). “Irreparable harm occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages.” Gen. Motors Corp. v. Harry Brown‘s, LLC, 563 F.3d 312, 319 (8th Cir. 2009). To satisfy this factor, “a party must show that the harm is certain and great and of such imminence that there is a clear and present need for equitable relief.” Morehouse Enters., LLC v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 78 F.4th 1011, 1017 (8th Cir. 2023) (quotation omitted). But this does not mean that the alleged harm must be “occurring or be certain to occur before a court may grant relief.” Richland/Wilkin Joint Powers Auth. v. U.S. Army Corps of Eng‘rs, 826 F.3d 1030, 1037 (8th Cir. 2016) (quoting Michigan v. U.S. Army Corps of Eng‘rs, 667 F.3d 765, 788 (7th Cir. 2011)).
When enforcement of a likely preempted state law “would result in irreparable economic loss” a court may find irreparable harm. Bank One, Utah v. Guttau, 190 F.3d 844, 850–51 (8th Cir. 1999) (finding that in the absence of an injunction, enforcement of an Iowa law against the bank “would result in irreparable economic loss” supporting preliminary injunctive relief). That is the case here. If the Minnesota prediction market statute goes into effect and Defendants pursue enforcement against Kalshi and Polymarket US, the DCMs will either continue to offer their event contracts to Minnesota users and face potential felony charges, or they will need to take steps to exit the market for their trades in Minnesota. Given the preliminary showing that there is a large volume
Moreover, enforcement of the Minnesota prediction market statute against Kalshi and Polymarket US risks other intangible harms that cannot be compensated by money damages. If no preliminary injunctive relief is awarded, the DCMs would cancel Minnesota users’ trades, which in turn would erode confidence of users in their platforms, potentially causing Minnesota users and others to leave the platforms, and deterring new users from entering event contracts. See Kalshi (Dkt. 25 ¶¶ 32, 41); Polymarket (Dkt. 23 ¶¶ 10–13). Such reputational harm and damage to the goodwill that Kalshi and Polymarket US have fostered with users of their platforms adds to the irreparable injury described above. See United Healthcare Ins. Co. v. AdvancePCS, 316 F.3d 737, 741 (8th Cir. 2002) (“Loss of
Finally, the Court also finds that the CFTC faces a threat of irreparable harm in the absence of preliminary injunctive relief. As discussed above, the Court has found that Minnesota‘s prediction market statute is likely at least partially preempted by the
IV. Remaining Factors
The remaining Dataphase factors—the balance of the harms and the public interest—also weigh in favor of granting injunctive relief. These factors “merge” when a state or state officials are sued in their official capacities. Eggers v. Enven, 48 F.4th 561, 564–65 (8th Cir. 2022). To be clear, Minnesota‘s statute was enacted in response to perceived serious harms caused by prediction markets like those run by Kalshi and Polymarket US. But when a state law is likely preempted, the harm to the state by
A preliminary injunction prohibiting Defendants from enforcing Minnesota‘s prediction market statute strikes the right balance of harms while preserving the status quo. If Plaintiffs prevail on the merits, Defendants will not be harmed because the preliminary injunction would simply have prevented enforcement of a state law that is preempted by the
Under the
Polymarket US asks the Court to waive
* * *
ORDER
For the reasons discussed above, IT IS HEREBY ORDERED THAT:
- The Motions for Preliminary Injunction, CFTC (Dkt. 24), Kalshi (Dkt. 21), and Polymarket (Dkt. 19) are GRANTED.
- Until a final decision on the merits is reached in these cases, Defendants are enjoined from enforcing
Minn. Stat. § 609.7615 , as amended and adopted by SF 3432, against entities that are registered as designated contract markets by the CFTC.
Let Judgment be entered accordingly.
Date: July 27, 2026
s/Katherine Menendez
Katherine Menendez
United States District Judge