Tennessee Federal Court Grants Kalshi Injunction in Sports Prediction Market Dispute – Explained
Key Facts
- A U.S. District Court in the Middle District of Tennessee granted Kalshi’s preliminary injunction against state officials, allowing it to keep offering sports event contracts in Tennessee during litigation.
- The court’s order indicates Kalshi is likely to succeed on its core preemption theory under the Commodity Exchange Act (CEA), which gives the CFTC “exclusive jurisdiction” over trading on designated contract markets.
- The decision lands amid uneven court outcomes for Kalshi across states, underscoring a growing split on how far federal preemption reaches in sports-related event contracts.
State enforcement on hold while Kalshi’s lawsuit moves forward
Kalshi secured a preliminary injunction in the U.S. District Court for the Middle District of Tennessee that prevents Tennessee officials from enforcing state sports wagering laws against the company’s sports event contracts as the litigation proceeds. This ruling allows Kalshi to continue offering sports prediction contracts in the state during the case.
The docket language publicly available through CourtListener indicates the motion was granted as to the state-official defendants and denied as to the Tennessee Sports Wagering Council, which the court dismissed from the case. That procedural wrinkle matters because it narrows who Kalshi is enjoining and reinforces that the dispute is framed primarily as a preemption fight against state executive enforcement.
Why Kalshi sued Tennessee
Tennessee’s pushback stems from the state treating sports event contracts as sports wagering that must comply with Tennessee’s sports gaming framework. Kalshi responded by filing for emergency relief in federal court, arguing the state was attempting to regulate activity on a federally regulated exchange.
Earlier in the case, Judge Aleta Trauger issued a temporary restraining order that barred enforcement pending a preliminary injunction hearing, finding - at that stage - that Kalshi was “likely to succeed on the merits” and would face irreparable harm if Tennessee enforced its laws against Kalshi’s offerings.
What the judge is weighing: state sports-betting law vs federal commodities oversight
Kalshi’s legal theory turns on classification and jurisdiction: it says its sports event contracts are derivatives (event contracts) traded on a CFTC-regulated exchange, and therefore sit within a federal regulatory scheme that preempts state gambling enforcement.
In its Tennessee complaint, Kalshi points directly to the CEA’s “exclusive jurisdiction” language and argues Congress designed the CFTC framework to avoid a patchwork of conflicting state rules governing trading on federally regulated exchanges.
That is the same basic playbook Kalshi has used across multiple states as regulators and attorneys general have tried to force sports contracts off their markets - an escalating set of disputes that has begun to look less like a series of one-off fights and more like a national test case about where gambling regulation ends and federal commodities oversight begins.
Why This Matters For Bettors
For Tennessee bettors, the injunction is simple in effect: Kalshi can keep offering its sports event contracts in the state while the lawsuit continues. That means access doesn’t get shut off mid-litigation, and the product can remain available through the remainder of the sports calendar unless the court changes course later or an appellate court steps in.
More importantly, the ruling gives bettors clearer short-term expectations about which rulebook governs the product right now. Tennessee regulators have been treating these sports event contracts like sports wagering that should be subject to Tennessee’s sports betting framework. The court’s injunction signals that Kalshi has a strong chance of winning the argument that its contracts fall under federal commodities law - and that federal oversight would preempt state-level enforcement while the case is pending.
Practically, this also affects the day-to-day user experience in a way bettors actually feel. When a platform is operating under litigation pressure without an injunction, operators tend to reduce risk: limit markets, restrict availability, or prepare for abrupt state-by-state exits. With an injunction in place, Kalshi can keep operating normally in Tennessee, keep listing contracts, and keep building liquidity without the immediate threat of state enforcement in the background - which matters for pricing, fills, and market depth on the biggest events.
Bettors should still understand the risk profile: a preliminary injunction is not a final ruling. It’s a temporary court order based on early merits and harm analysis. The case can still go the other way after fuller briefing, additional evidence, or appeal.
What Happens Next
Kalshi’s injunction is preliminary, meaning the case continues on the merits. The immediate implications are procedural and strategic:
- Tennessee enforcement remains blocked for now, keeping Kalshi’s sports contracts available in the state during litigation.
- The state can appeal or seek to narrow the injunction, which is often where preemption fights start to harden into binding precedent.
- Other states will watch closely as an appellate reversal would strengthen state regulators’ leverage in parallel disputes.
Related News
Marcus has spent over 20 years navigating the legal side of online betting - from his early days consulting for offshore operators to helping licensed U.S. sportsbooks launch in regulated markets. He’s worked with compliance teams, reviewed licensing frameworks in 15+ states, and advised on some of the biggest regulatory shifts since PASPA was repealed.
At BettingScanner, Marcus serves as the voice of reason - translating legalese into plain English and helping bettors understand what’s legal, what’s risky, and where the gray areas live. If you’re ever unsure about the rules, Marcus is your man - as he probably helped write them.
