A federal judge in Tennessee has blocked the state’s gambling regulator from enforcing a cease-and-desist order against Kalshi, giving the event contract platform temporary relief as it battles accusations of operating illegal sports wagering markets.

The ruling, issued Monday by US District Judge Aleta Trauger, grants Kalshi’s request for a preliminary injunction and restraining order against the Tennessee Sports Wagering Council and the state’s attorney general. 

According to Judge Trauger, Kalshi could suffer “irreparable injury and loss” if the state’s enforcement proceeds. 

Further, she added that the firm appears “likely to succeed on the merits” of its claims.

Tennessee regulators launched an enforcement action earlier this month against Kalshi, Polymarket, and Crypto.com, ordering the platforms to immediately stop offering sports-related contracts to residents and to refund all user deposits by January 31.

The Tennessee Sports Wagering Council sent cease-and-desist letters accusing all three platforms of offering sports wagering products without holding the necessary licensing, while threatening them with potential civil fines of up to $25,000 per violation.

Kalshi fired back almost immediately, filing its suit against the Council, its chair William Orgen, executive director Mary Beth Thomas, and Attorney General Jonathan Skrmetti. 

It contends that its operation falls under the “exclusive jurisdiction” of the Commodity Futures Trading Commission (CFTC), not state-level gambling agencies.

“Tennessee’s intent to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges,” Kalshi argued in its filings.

For now, the Tennessee case remains on hold as Judge Trauger’s ruling allows Kalshi to continue offering its services in the state ahead of a preliminary injunction hearing scheduled for Jan. 26.

Kalshi has deployed a similar defence in multiple lawsuits lodged in recent months, asserting that its event-based markets are federally regulated financial instruments rather than wagers subject to state licensing rules.

For instance, after receiving a cease-and-desist letter from the New York State Gaming Commission on October 24, Kalshi responded with a federal lawsuit three days later.

At the time, the company argued that New York’s action “threatens immediate and irreparable harm” to both its operations and its users, and that state officials are encroaching on a domain reserved for federal oversight under the Commodity Exchange Act.

Kalshi’s legal standing has seen mixed results. Federal judges in Nevada and New Jersey have granted temporary injunctions in the company’s favor, pausing regulatory enforcement while lawsuits proceed. 

However, Kalshi suffered a setback in Maryland, where a judge rejected its motion for preliminary relief, concluding that federal derivatives law does not override state authority to regulate gambling.

Despite the legal pressure across multiple jurisdictions, Kalshi’s growth trajectory has not gone unnoticed by investors. 

The company has secured $300 million in funding from backers, including Andreessen Horowitz and Sequoia Capital, adding to a $185 million raise earlier in 2025 led by Paradigm.

The post Kalshi prevails in early legal round against Tennessee gambling regulator appeared first on Invezz

107 +