- A U.S. federal judge temporarily blocked Tennessee from enforcing its gambling laws against prediction market operator Kalshi.
- The court ruled Kalshi‘s sports contracts are likely “swaps” under the Commodity Exchange Act, giving the CFTC exclusive jurisdiction.
- The ruling is part of a broader clash between federal and state authorities over the regulation of event contracts and prediction markets.
- Kalshi must post a $500,000 bond and the injunction applies to state officials, not the dismissed Tennessee Sports Wagering Council.
A Tennessee federal judge issued a preliminary injunction on Thursday, temporarily preventing state authorities from targeting prediction markets operator Kalshi under local gambling statutes. Judge Aleta Trauger of the U.S. District Court for the Middle District of Tennessee allowed Kalshi to continue offering sports event contracts in the state while its lawsuit proceeds.
The court’s ruling found Kalshi is likely to succeed on its claim that federal commodities law preempts Tennessee’s enforcement. Consequently, it concluded the company’s contracts are “swaps” under the Commodity Exchange Act, falling under the exclusive jurisdiction of the CFTC.
However, the Tennessee Sports Wagering Council itself was dismissed from the case on sovereign immunity grounds. The injunction applies only to named state officials, and Kalshi was ordered to post a $500,000 bond.
This case represents another chapter in a long-running clash between Kalshi and multiple states. The company has faced similar cease-and-desist actions in Nevada, New Jersey, and Connecticut, with courts reaching divergent conclusions on preliminary relief.
Meanwhile, the CFTC is actively stepping in to defend its oversight of prediction markets. Chair Michael Selig recently stated the agency would defend its “exclusive jurisdiction” in court if state authorities undermine federal oversight of these derivatives.
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