A federal judge in Tennessee has issued a temporary injunction, allowing Kalshi to continue its operations offering sports event contracts while a legal battle unfolds against the state. Judge Aleta Trauger of the US District Court for the Middle District of Tennessee ruled on Thursday that Kalshi is likely to prevail in its argument that federal commodities law takes precedence over Tennessee's gambling regulations.
The court classified Kalshi’s contracts as “swaps” under the Commodity Exchange Act, thereby granting the US Commodity Futures Trading Commission (CFTC) exclusive authority over them. As part of the ruling, Kalshi must post a bond of $500,000, but the Tennessee Sports Wagering Council was dismissed due to sovereign immunity.
This ruling is part of a larger national debate regarding the regulation of event contracts, as Kalshi has faced similar legal challenges in states like Nevada, New Jersey, and Connecticut. The CFTC has indicated it will assert its jurisdiction over prediction markets, with Chair Michael Selig recently stating the agency’s commitment to defending its regulatory authority in court.