U.S. District Judge Katherine Menendez found the three plaintiffs likely to succeed on express-preemption claims, and the platforms likely to suffer irreparable harm. Her 44-page order bars enforcement against exchanges registered with the CFTC as designated contract markets, and holds until a decision on the merits.
The swap questionWhether Minnesota's law is preempted, Menendez wrote, turns on whether the trades at issue "qualify as 'swaps' within the meaning of the CEA." Contracts on Senate races, the World Cup winner and the reopening of the Strait of Hormuz clear that bar, she found, because they concern events with "clear potential economic, financial, or commercial consequences." Kalshi markets on who wins Love Island USA, or on what announcers say mid-match, likely do not.
The split matters because of how the case was brought. The CFTC confirmed at the July 2 hearing that its challenge is facial, which requires showing there is no set of circumstances in which the law would be valid. Menendez found the statute "may not be preempted in all its applications" and enjoined it anyway to preserve the status quo, faulting both sides for treating the dispute as "all-or-nothing propositions." Permanent relief, she wrote, "may be much narrower."
Where the fight goes next
