A federal judge has ruled that Minnesota’s law banning prediction markets likely conflicts with the federal Commodity Exchange Act, granting Kalshi, Polymarket and the Commodity Futures Trading Commission a preliminary injunction against the statute.

Judge Katherine Menendez of the U.S. District Court for the District of Minnesota said Monday that Minnesota’s recently enacted law, which would prohibit prediction market operators from offering their products in the state, appears to be preempted by the federal Commodity Exchange Act, or CEA. She wrote that the companies and the federal regulator “are likely to succeed” in proving that argument at trial.

Kalshi, Polymarket and the CFTC sued Minnesota earlier this year after the state passed a law criminalizing the operation of prediction markets. The plaintiffs argued that the statute interfered with the CFTC’s authority to regulate “swaps,” the legal structure under which prediction market contracts are organized. The ruling adds another example of the legal tension surrounding event-based contracts, which have drawn scrutiny from state officials even as the products remain tied to federal commodities law.

In her ruling, Menendez said the three parties had shown they were likely to succeed on their claims that the federal law governing U.S. commodities exchanges preempts the Minnesota statute, that the CFTC has jurisdiction over the products, and that the plaintiffs are likely to prevail on the merits of the case.

“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,” the ruling said. “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 CEA.”

The judge noted that some contracts on prediction markets could fall within the scope of the Minnesota law, citing predictions about who might win the television program “Love Island” as one example. She added, however, that it would be difficult to limit a preliminary injunction to only those issues.

Menendez also said allowing the law to take effect would cause “irreparable harm” to Kalshi and Polymarket.

The preliminary injunction will remain in place until “a final decision on the merits is reached,” the judge said.