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An event in the American judicial system has become a turning point for the future of blockchain-based prediction platforms. A US federal court has temporarily suspended a Minnesota law targeting two well-known services – Polymarket and Kalshi. This law, which was scheduled to take effect on July 26, would have completely banned advertising for prediction markets and introduced criminal penalties for anyone facilitating the operation of such platforms. However, the court found the platforms' arguments persuasive, allowing them to continue operating in the state, at least during the trial.

The court's main argument was the superiority of the federal Commodity Exchange Act over state law. The court found that some contracts offered by Polymarket and Kalshi fall under the definition of swaps based on their economic and legal characteristics, and therefore their regulation falls exclusively within the purview of the U.S. Commodity Futures Trading Commission (CFTC), not local authorities. The court also noted that not all contracts on these platforms are swaps, which allows for the possibility of applying some provisions of the Minnesota law in the future, but a complete ban is currently deemed premature.

This conflict between forecasting platforms and state authorities is not new. Previously, the Arizona Attorney General filed criminal charges against Kalshi, calling its activities illegal gambling. However, a federal judge also stayed that case, applying the same logic as in Minnesota. A similar lawsuit is pending in Kentucky. In Connecticut and Illinois, regulators have ordered the platforms to shut down due to the lack of online gaming licenses, and in Massachusetts, Polymarket is challenging the restrictions. A total of sixteen states reportedly consider such platforms to be in violation of gambling laws.

The Minnesota decision highlights the federal courts' reluctance to delegate regulation of new financial instruments to regional authorities. However, the Minnesota law's partial applicability clause means that the platforms' victory is not yet final. Future hearings should clarify which contracts fall under the CFTC's jurisdiction and which remain under the jurisdiction of the states. For now, Polymarket and Kalshi can continue to operate in Minnesota, which is a tactical success but not a complete solution.

This situation reflects a broader conflict between new technologies and outdated legal norms. The federal court is temporarily holding back tough state measures, but systemic federal regulation is needed in the long term. Without it, such legal disputes will continue, creating uncertainty for businesses and users. For now, the platforms have won an initial victory, but the final decision remains to be seen.