Judge pauses Tennessee order targeting Kalshi sports markets
A federal judge halted Tennessee’s cease-and-desist order against Kalshi while the court weighs whether federal commodities law preempts the state’s sports-betting rules.
A federal judge temporarily blocked Tennessee from enforcing a cease-and-desist order against Kalshi, pausing efforts to shut its sports event contracts while the court reviews whether federal commodities law overrides state gambling rules.
In an order signed Monday, the court froze enforcement by the Tennessee Sports Wagering Council and the state attorney general. Regulators had directed Kalshi, along with Polymarket and Crypto.com, to stop offering sports-related contracts to Tennessee residents, void open contracts and refund customer deposits by Jan. 31.
Tennessee officials warned that violations could carry fines of up to $25,000 per offense and possible referrals to law enforcement. The state actions targeted contracts tied to sports outcomes that regulators view as unlicensed wagering.
Kalshi argues its markets are listed on a platform regulated by the Commodity Futures Trading Commission and that the Commodity Exchange Act gives the federal government exclusive authority over derivatives on designated exchanges. In its complaint, the company asserts Tennessee’s threatened enforcement is preempted under both field and conflict doctrines.
The Tennessee dispute follows broader state scrutiny of sports-based event contracts. As of November 2025, Arizona, Illinois, Maryland, Michigan, Montana, Nevada, New Jersey, New York and Ohio had issued cease-and-desist letters to Kalshi over sports contracts. Regulators in Connecticut also issued orders to Kalshi, Robinhood and Crypto.com alleging illegal sports wagering; Kalshi obtained temporary relief in that case.
Courts have split on whether sports event contracts are regulated derivatives or illegal sports betting. In late 2025, a federal judge in Nevada ruled that Kalshi must comply with Nevada gaming rules, rejecting the company’s preemption arguments. Kalshi has filed separate lawsuits against gaming regulators in Nevada and New Jersey challenging cease-and-desist notices.
Read more about our coverage of Kalshi’s founders – Luana Lopez Lara and Tarek Mansour.
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