Court Temporarily Stops Tennessee From Taking Action Against Kalshi (2026)

Kalshi is free to continue operating in Tennessee for now, as a federal judge blocked state regulators from taking action after the prediction market sued.

A Tennessee federal judge has temporarily stopped state regulators from taking action against the prediction markets platform Kalshi, which had sued the state after being ordered to cease offering sports event contracts.

In an order on Monday, Judge Aleta Trauger supported Kalshi’s earlier motion for a preliminary injunction and temporary restraining order against the Tennessee Sports Wagering Council and the state’s attorney general while the court case moves ahead.

The judge said Kalshi “will suffer irreparable injury and loss” by the regulator’s actions, and the company “is likely to succeed on the merits of its claims and its rights will likely be violated” unless the regulator is restrained.

The Tennessee Sports Wagering Council sent Kalshi, Polymarket and Crypto.com cease-and-desist letters on Friday, ordering them to stop offering sports event contracts in the state.

The regulator accused all three of offering sports wagering products without a license. It ordered them to stop offering the products in Tennessee, void all contracts, and refund all users in the state by Jan. 31, threatening fines of up to $25,000 per offense.

Shortly after receiving the letter, Kalshi sued the Sports Wagering Council; its chair, William Orgen; and its executive director, Mary Beth Thomas, along with state attorney general Jonathan Skrmetti.

The company argued that, as a federally designated derivatives exchange, it is subject to the “exclusive jurisdiction” of the Commodity Futures Trading Commission.

“Tennessee’s intent to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges,” Kalshi said.

Related: CFTC issues no-action letter to Bitnomial, clearing way for event contracts

Source: CoinTelegraph