Kalshi and Polymarket obtained a temporary court order that is stopping Minnesota from applying its ban on prediction markets, enabling two of the fastest growing trading services to keep ope
Kalshi and Polymarket obtained a temporary court order that is stopping Minnesota from applying its ban on prediction markets, enabling two of the fastest growing trading services to keep operating as the sector record-high growth.
The ruling will have wider implications for cryptocurrency. Polymarket performs onchain margin settlement using stablecoin. In addition, cryptocurrency-related trades account for a significant proportion of the trading carried out by both companies above.
Therefore, the state-level ban will not only affect two companies— it will also determine how far states can go in regulating the markets that increasingly intertwine with digital assets at a time when regulators are still trying to determine whether prediction markets are subject to the regulation of derivatives law or fall under gambling regulations.
Prediction markets allow people to get involved in trading through contracts related to future events. The cost of the contracts reflects the probability of the prediction happening, as stated by Pew Research Center.
Crypto has become one of the industry’s largest trading categories. Pew estimates digital asset contracts account for roughly 20% of Polymarket’s trading volume and about 7% of Kalshi’s since July 2024, behind only sports and politics.
This makes it clear that Minnesota’s lawsuit is important not just to the two companies. Polymarket’s move to a high-performance central limit order book (CLOB v2) and its launch of a new USDC-backed token, called pUSD, show a trend in the way leading prediction markets are changing into more advanced crypto-native trading infrastructure.
As these platforms become faster, more liquid, and better integrated with blockchain-based settlement, legal rulings in Minnesota have greater significance for the whole digital asset ecosystem. In blocking the implementation of Minnesota’s ruling, the court allows for the continuation of a big amount of crypto-native trading activity in Minnesota.
The fast growth of the industry explains why the case has gotten more attention. Data from Artemis indicates that the trading volume of prediction markets remained between $25 and $30 billion every month in the first five months of 2026, and after that, it reached a historical record of $52.8 billion in June.
For the month of July, the month-to-date trading volume reached $50.9 billion, which means that trade activity is high even after the FIFA World Cup, which was one of the biggest trading events of the year.
Unlike in previous years when political events and developments have taken center stage, this year’s developments in prediction markets have been driven by sports events, macroeconomic expectations, the activities of the central bank and developments in the crypto markets.
According to Galaxy Research, the cumulative lifetime volume of prediction markets has broken past $150 billion. Bernstein analysts mentioned by Galaxy believe that if regulations improve, prediction markets may be worth as much as $1 trillion by the year 2030.
However, whether or not this happens depends on an important issue that is currently being tested out in Minnesota and various other states: market access.
Competition has shifted in favor of Kalshi as well. According to Token Terminal data, the regulated exchange has taken hold of 61.1% of the cumulative prediction market notional volume in the last five years, having $159.5 billion opposed to $101.7 billion of Polymarket. Kalshi made $39.5 billion in the last 30 days in notional volume compared to Polymarket’s $8.7 billion volume, which highlights the exchange’s momentum lately.
The main difference between them is regulation. Kalshi is a Designated Contract Market regulated by the Commodity Futures Trading Commission (CFTC), whereas Polymarket does not have CFTC oversight of its international platform.
According to estimates from Galaxy, Polymarket’s U.S. operations generated about $1.3 billion worth of trades in April versus about $9 billion on its international platform. Also, it has been reported that Polymarket is currently pursuing broader regulatory approval in the U.S. for its flagship platform.
Thus, the controversy that originated in Minnesota is making an impact beyond the state concerned. If judges persist in siding with federal regulation of prediction exchanges instead of state regulation of gambling, prediction markets may become one of the key areas where cryptocurrencies achieve broad acceptance using existing regular market regulation as opposed to specific cryptocurrency laws. If states win in the end, however, the market may face many obstacles as it operates amid conflicting regulations.
The ruling by the court is provisional, and the larger issue of whether states are permitted to restrict federally regulated prediction markets is still open. Traders will be interested to see what Minnesota’s next step is, whether other states will enact similar restrictions, and how Polymarket will succeed in expanding its regulatory reach in the U.S.
The outcome could shape more than prediction markets. As stablecoins and digital asset contracts become increasingly embedded in these platforms, the case may influence how institutional investors view blockchain-based financial infrastructure. The Minnesota dispute could ultimately help determine whether federal derivatives oversight or state gambling laws define the next stage of this rapidly expanding market.
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