A federal judge in Tennessee has temporarily blocked state regulators from taking action against the prediction markets platform Kalshi, which had filed a lawsuit after being ordered to stop offering sports event contracts.
On Monday, Judge Aleta Trauger granted Kalshi’s request for a preliminary injunction and a temporary restraining order against the Tennessee Sports Wagering Council and the state’s attorney general as the case proceeds.
The judge noted that Kalshi “will suffer irreparable injury and loss” if the regulators’ actions continue and stated the company “is likely to succeed on the merits of its claims” and that its rights could be violated without court protection.
Last Friday, the Tennessee Sports Wagering Council issued cease-and-desist letters to Kalshi, Polymarket, and Crypto.com, demanding they halt the offering of sports event contracts within the state.
The Tennessee regulator accused Kalshi, Polymarket, and Crypto.com of offering sports wagering products without a license, ordering them to halt operations in the state, void all existing contracts, and refund users by Jan. 31. The agency warned that violations could result in fines of up to $25,000 per offense.
In response, Kalshi filed a lawsuit against the Sports Wagering Council, its chair William Orgen, executive director Mary Beth Thomas, and state attorney general Jonathan Skrmetti. The company argued that, as a federally designated derivatives exchange, it falls under the “exclusive jurisdiction” of the Commodity Futures Trading Commission.
“Tennessee’s attempt to regulate Kalshi intrudes on the federal framework Congress established for derivatives on designated exchanges,” the company said.
Kalshi has made similar claims in other lawsuits against state regulators who issued cease-and-desist letters to it and competitors, asserting that prediction market platforms should not require state-level licensing.
So far, courts in Nevada and New Jersey have sided with Kalshi, blocking state actions while lawsuits proceed, though a Maryland judge denied a similar request.
Tennessee’s enforcement action against Kalshi is on hold until a preliminary injunction hearing scheduled for Jan. 26, allowing the platform to continue operating in the state in the meantime.
