Federal Judge Hits Pause on Tennessee’s Kalshi Crackdown
A significant development in the fast-evolving prediction market landscape: a federal judge has temporarily blocked Tennessee regulators from enforcing their cease-and-desist order against Kalshi. The ruling arrives just days after the state attempted one of the most aggressive crackdowns yet, ordering Kalshi, Polymarket, and Crypto.com to halt sports event contracts, void open positions, and refund users.
Judge Aleta Trauger issued a temporary restraining order that prevents Tennessee from applying its gambling and sports betting statutes while the case proceeds. The court noted that Kalshi is likely to succeed on the merits of its argument that, as a CFTC-regulated designated contract market, it falls under exclusive federal oversight.
This pause gives Kalshi room to continue operating in the state while a broader legal battle plays out — one that could help define whether sports-based event contracts are federally protected derivatives or unlicensed gambling subject to state control. With conflicting rulings emerging nationwide, the Tennessee case is shaping up to be another pivotal moment for the industry.