Tennessee Judge Pauses State Case Against Prediction Market Kalshi
A federal choose in Tennessee has quickly blocked state regulators from taking enforcement motion in opposition to Kalshi.
Key Takeaways:
- A federal choose quickly blocked Tennessee regulators from imposing a cease-and-desist order in opposition to Kalshi.
- The courtroom discovered Kalshi would face irreparable hurt and is probably going to achieve arguing federal jurisdiction over its platform.
- The case reveals a rising battle between state playing legal guidelines and federal oversight of prediction markets.
In an order issued Monday, US District Judge Aleta Trauger granted Kalshi’s request for a preliminary injunction and non permanent restraining order in opposition to the Tennessee Sports Wagering Council and the state’s legal professional basic.
The ruling prevents regulators from imposing a current cease-and-desist order whereas the case proceeds.
Judge Says Tennessee Action Would Cause Irreparable Harm to Kalshi
Judge Trauger mentioned Kalshi would face “irreparable damage and loss” if the state’s actions have been allowed to proceed and located that the corporate is more likely to succeed on the deserves of its claims.
She added that Kalshi’s rights would seemingly be violated absent courtroom intervention.
The dispute started Friday, when the Tennessee Sports Wagering Council sent cease-and-desist letters to Kalshi, Polymarket and Crypto.com, ordering them to halt the providing of sports activities occasion contracts within the state.
Regulators accused the platforms of offering unlicensed sports activities wagering merchandise and directed them to void present contracts and refund Tennessee customers by Jan. 31.
The letters warned of civil penalties of as much as $25,000 per violation.
Kalshi moved rapidly to problem the order in courtroom, suing the council, its management and the state legal professional basic.
The firm argued that Tennessee overstepped its authority by making an attempt to manage a federally overseen derivatives alternate.
BREAKING: Tennessee Sports Wagering Council sends cease-and-desist letters to Kalshi (
), Polymarket and Crypto, demanding that they stop providing sports activities occasion contracts to TN prospects instantly, void all pending contracts and difficulty refunds by Jan. 31. Lawsuits are imminent. pic.twitter.com/jDIPIwsrCn
— Daniel Wallach (@WALLACHLEGAL) January 9, 2026
Kalshi contends that it operates underneath the unique jurisdiction of the Commodity Futures Trading Commission, which oversees designated contract markets.
According to the corporate, state-level intervention conflicts with the federal regulatory framework established by Congress for derivatives buying and selling.
“Tennessee’s intent to manage Kalshi intrudes upon the federal system for overseeing derivatives markets,” the corporate mentioned in its criticism, framing the case as a conflict between state playing legal guidelines and federal commodities regulation.
The Tennessee lawsuit mirrors related authorized battles unfolding throughout the US. Kalshi has filed fits in opposition to different state regulators which have tried to limit prediction markets, with combined outcomes.
Courts in Nevada and New Jersey have granted non permanent reduction, blocking state motion whereas litigation continues, whereas a federal choose in Maryland declined to difficulty an analogous injunction.
State Opposition to Prediction Markets Builds Over Consumer Concerns
State opposition to prediction markets has been constructing for months.
In 2025, the SWC urged the CFTC to ban sports activities occasion contracts, arguing that such merchandise bypass state safeguards resembling age verification, accountable gaming guidelines and anti-money laundering necessities.
As reported, a brand new laws to restrict the interactions between authorities officers and the prediction markets is being supported by more than 30 Democrats within the US House of Representatives, together with former Speaker Nancy Pelosi.
The lure behind new restrictions is a controversial Polymarket wager, which started as a wager of $32,000 however finally turned greater than $400,000 shortly earlier than the sudden detention of Venezuelan President Nicolás Maduro.
The invoice proposed by the New York Representative Ritchie Torres is the Public Integrity in Financial Prediction Markets Act of 2026.
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