A federal judge in Tennessee has temporarily halted state regulators from taking action against the prediction markets platform Kalshi. The ruling comes after Kalshi sued the state following orders to stop offering sports event contracts, citing federal jurisdiction over derivatives trading.
In Monday’s order Judge Aleta Trauger granted Kalshi a preliminary injunction and temporary restraining order against the Tennessee Sports Wagering Council and the state attorney general. The judge noted that Kalshi “will suffer irreparable injury and loss” if regulators proceed, and stated the company is likely to succeed on the merits of its claims under federal law.
The Tennessee Sports Wagering Council issued cease-and-desist letters to Kalshi, Polymarket, and Crypto.com last Friday, asserting that their sports event contracts amounted to unlicensed sports wagering. The regulator demanded contracts be voided, users refunded, and threatened fines of up to $25,000 per violation.
Kalshi contends that as a federally designated derivatives exchange, it falls under the exclusive authority of the Commodity Futures Trading Commission, and that Tennessee’s intervention intrudes on federal regulatory frameworks. Similar legal challenges in Nevada and New Jersey have favored Kalshi, while Maryland courts denied a temporary block.Tennessee’s enforcement actions remain on hold until the preliminary injunction hearing scheduled for January 26, allowing Kalshi to continue operations in the state while the lawsuit progresses.
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