Ultimate Guide: Federal Judge Blocks Tennessee Action Against Kalshi Pending...

Kalshi can continue offering event contracts in Tennessee after a federal judge temporarily restrained state regulators pending a preliminary injunction hearing.

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.

On Monday, Judge Aleta Trauger granted a temporary restraining order and scheduled a hearing on Kalshi’s request for a preliminary injunction against Tennessee regulators.

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