A federal judge in Tennessee has temporarily blocked the state from enforcing its gambling laws against prediction markets operator Kalshi’s sports event contracts.
Judge Aleta Trauger issued the ruling Thursday, allowing Kalshi to continue offering sports-related event contracts in the state while its lawsuit against Tennessee regulators proceeds. Trauger found that federal commodities law likely preempts Tennessee’s attempt to regulate these markets as illegal gambling.
The court concluded Kalshi’s sports event contracts are “swaps” under the Commodity Exchange Act, which grants the US Commodity Futures Trading Commission (CFTC) exclusive jurisdiction. Tennessee’s enforcement efforts are therefore likely preempted.
The injunction applies to named state officials. Kalshi was ordered to post a $500,000 bond.
This case is part of a broader dispute over how event contracts are treated nationwide. Kalshi has faced similar legal challenges in Nevada, New Jersey, and Connecticut, with courts reaching varied conclusions.
The injunction also follows the CFTC’s recent move to assert primacy over prediction markets. CFTC Chair Michael Selig stated the agency filed a brief defending its “exclusive jurisdiction” and warning state authorities against undermining federal oversight of these derivative markets.