A federal judge has temporarily prohibited Tennessee state regulators from enforcing an order against the event contract platform Kalshi, which had previously been directed to stop offering sports-event contracts in the state.
On Monday, Judge Aleta Trauger issued a temporary restraining order and arranged a hearing regarding Kalshi’s request for a preliminary injunction against Tennessee regulators. The judge noted that the platform would face significant harm and loss due to the actions of the regulators, emphasizing that Kalshi was likely to win its claims and that its rights could be violated without this judicial protection.
Previously, the Tennessee Sports Wagering Council issued cease-and-desist letters to Kalshi, Polymarket, and Crypto.com, mandating a halt to their offerings of sports contracts in the state.
The council accused all three platforms of distributing sports wagering products without the appropriate licensing, instructing them to cease operations, annul all contracts, and refund users by January 31, with potential fines of $25,000 for violations.
Kalshi’s Legal Action Against Tennessee
In response to the cease-and-desist, Kalshi filed a lawsuit against the Sports Wagering Council, its chair William Orgen, its executive director Mary Beth Thomas, and state attorney general Jonathan Skrmetti. The platform argued that as a federally recognized derivatives exchange, it falls under the exclusive jurisdiction of the Commodity Futures Trading Commission.
Kalshi contended that Tennessee’s regulation attempts infringe on the federal framework established by Congress for regulating derivatives on designated exchanges.
Recent lawsuits filed by Kalshi have yielded favorable outcomes in Nevada and New Jersey, where courts blocked state regulators from acting against the platform while the litigation continues. However, a judge in Maryland did not grant a temporary injunction.
Tennessee’s case against Kalshi is presently halted pending a hearing scheduled for January 26, permitting the platform to continue functioning in the state.
