Kalshi Files Lawsuit in Tennessee Over Sports Event Contract C&D

• Kalshi has filed a lawsuit against the Tennessee Sports Wagering Council
• The Tennessee Sports Wagering Council recently filed a cease-and-desist against the company regarding its sports event contracts
• Kalshi filed the lawsuit in the U.S. District Court for the Middle District of Tennessee

Kalshi has fired back against the Tennessee Sports Wagering Council’s cease-and-desist notice regarding the company’s sports event contracts.

The company filed a lawsuit against the Tennessee Sports Wagering Council in the U.S. District Court for the Middle District of Tennessee, seeking a permanent injunction against the state regulatory body and declaratory relief.

The Tennessee Sports Wagering Council last week issued cease-and-desist notices to Kalshi, Polymarket, and Crypto.com, ordering the companies to immediately cease offering sports event contracts in the state and issue full refunds to customers.

Similar Gameplan in Tennessee

Kalshi is following a similar route in Tennessee as it has in other states where gaming commissions have ordered the company to pull their sports event contracts out of its borders. Kalshi filed the lawsuit within 24-hours of receiving the cease-and-desist notice from the gaming council.

“Tennessee’s intent to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges. The state’s efforts to regulate Kalshi are both field-preempted and conflict-preempted. This Court should therefore issue both a preliminary and a permanent injunction, as well as declaratory relief,” Kalshi counsel noted in the lawsuit.

The Tennessee Sports Wagering Council’s actions threaten “immediate and irreparable harm” to Kalshi, but also to its customers and commercial counterparties, counsel reported in the lawsuit. The council’s intention to to regulate Kalshi intrudes upon the regulatory framework that Congress established for regulating derivatives on designated exchanges.

The cease-and-desist notices ordered the companies to cease their offerings immediately and refund customer funds by Jan. 31, 2026, at the latest.

All three companies are running afoul of the Tennessee Sports Wagering Act, according to the sports wagering council. Any person or entity who accepts money risked on the outcome of a sporting event without a license issued by the sports wagering council is violating the act.

“Defendants’ conduct leaves no doubt that Defendants intend to seek enforcement against Kalshi unless Kalshi stops offering its sports-event contracts—which, again, are offered for trade on its federally regulated exchange without objection from the CFTC—in Tennessee. In doing so, Defendants would seek to subject Kalshi to the patchwork of state regulation that Congress created the CFTC to prevent, and to interfere with the CFTC’s exclusive authority to regulate derivatives trading on the exchanges it oversees,” counsel wrote.

Kalshi is requesting a permanent injunction against the Tennessee Sports Wagering Council to continue to offer its sports event contracts in the state.

Why the Lawsuit?

Kalshi’s lawsuit against the Tennessee Sports Wagering Council – and all of its lawsuits against state gaming commissions – revolves around the central question of who regulates sports event contracts, and prediction markets, in general.

Companies such as Robinhood, Kalshi, and Crypto.com believe that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in New Jersey, Nevada, and Maryland to defend its practices. These companies believe the CFTC is the only regulatory body that can legally block contracts from being offered to customers.

State gaming regulators maintain the markets need to be beholden to regulations, taxes, and license fees that sports betting and gaming operators are required to follow.

The prediction market companies believe their offerings are not required to comply with state laws, as they have been preempted by the Commodity Exchange Act.