Federal court shields Kalshi and Polymarket from Minnesota’s felony crackdown days before deadline

A federal judge has temporarily barred Minnesota from enforcing its new prediction-market felony law against federally regulated exchanges designated by the Commodity Futures Trading Commission as contract markets, including Kalshi and Polymarket US, days before the statute takes effect on Aug. 1.Judge Katherine Menendez granted preliminary-injunction motions filed by the CFTC, KalshiEX and QCX, the registered entity doing business as Polymarket US. Her July 27 order prevents named Minnesota officials from enforcing Minn. Stat. § 609.7615 against CFTC-designated contract markets until the cases reach a final merits decision.Why the court found likely partial preemptionMenendez found the plaintiffs likely to prove that the Commodity Exchange Act expressly preempts part of Minnesota’s law. Federal law gives the CFTC exclusive jurisdiction over swap transactions conducted on designated contract markets, and the swap definition can include event contracts whose outcomes have a reasonably connected potential financial, economic or commercial consequence. A trader’s potential profit alone is not enough.The order does not treat every event contract as a swap. Menendez identified markets t...