U.S. District Court Judge Grants Kalshi Preliminary Injunction in Tennessee

• A U.S. District Court judge has granted Kalshi a preliminary injunction in Tennessee
• The preliminary injunction allows the company to continue offering its sports event contracts in the state during its lawsuit
• The Tennessee Sports Wagering Council filed a cease-and-desist against the company in January regarding its sports event contracts

Kalshi gained a victory in U.S. District Court as a judge has granted the prediction market company a preliminary injunction in the Volunteer State.

U.S. District Court Judge Aleta A. Trauger granted Kalshi’s motion for a preliminary injunction. The preliminary injunction will allow Kalshi to continue offering its prediction contracts, including the controversial sports event contracts, during the course of its lawsuit against the Tennessee Sports Wagering Council.

Kalshi filed a lawsuit against the state after the Tennessee Sports Wagering Council issued a cease-and-desist against the company in January regarding its sports event contracts.

Ends Recent Run of State Defeats

Kalshi snapped a recent run of legal defeats with its preliminary injunction in Tennessee. Just this week, the U.S. Ninth Circuit Court of Appeals denied Kalshi’s emergency motion for administrative stay in Nevada, which may lead to the state being geofenced off from certain event contracts.

Kalshi filed its motion on Feb. 11. After its denial, the Nevada Gaming Control Board (NGCB) on Tuesday filed civil enforcement action in the District Court for Carson City against Kalshi, asking the court for an injunction to stop the company from offering unlicensed sports betting in violation of Nevada law.

In late January, Justice of the Superior Court Christopher K. Barry-Smith approved the commonwealth’s preliminary injunction request, while at the same time denying Kalshi’s motion to dismiss the predictions market lawsuit.

If upheld, the decision will prohibit Kalshi from offering its sports event contracts in Massachusetts through the course of the state’s lawsuit against them.

Tennessee Lawsuit Similar to Other States

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.