A U.S. federal judge has temporarily blocked Tennessee from enforcing its gambling laws against prediction markets platform Kalshi. The ruling allows Kalshi to continue offering sports event contracts in the state while its lawsuit proceeds, finding the firm is likely to succeed on its claim that federal commodities law preempts state regulation.
A U.S. federal judge in Tennessee temporarily blocked the state from enforcing its gambling laws against prediction markets operator Kalshi‘s sports event contracts. Judge Aleta Trauger’s ruling allows Kalshi to continue offering these contracts to state users while its lawsuit proceeds.
The court found Kalshi is likely to succeed on its claim that federal commodities law preempts Tennessee’s attempt to regulate its sports markets as illegal gambling. It concluded Kalshi’s contracts are “swaps” under the Commodity Exchange Act, granting the CFTC exclusive jurisdiction.
The injunction applies to state officials, while the Tennessee Sports Wagering Council was dismissed on sovereign immunity grounds. Kalshi was ordered to post a $500,000 bond as part of the preliminary injunction.
This case is part of a broader clash over event contracts in the United States. Kalshi has similarly gone to federal court in multiple states, including Nevada, New Jersey, and Connecticut, over cease-and-desist actions targeting its event markets.
The injunction lands as the CFTC moves to assert primacy over prediction markets. In a video message, CFTC Chair Michael Selig said the agency filed a friend-of-the-court brief to defend its “exclusive jurisdiction” over these markets.
Chair Selig warned state authorities that the commission would meet them in court if they tried to undermine federal oversight. This action signals the federal regulator’s intent to actively defend its regulatory territory concerning prediction market derivatives.
