Catenaa, Thursday, January 15, 2026- A US federal court has temporarily halted Tennessee’s attempt to force prediction market operator Kalshi to stop offering sports event contracts, pausing a cease-and-desist order while the court reviews the case, a news report published by Reuters said.
The ruling freezes enforcement by the Tennessee Sports Wagering Council and the state attorney general, who had demanded Kalshi, along with Polymarket and Crypto.com, void open contracts and refund customer deposits by January 31. Noncompliance could have led to fines up to $25,000 per offense.
Kalshi argued the dispute involves a jurisdictional conflict between state gambling authorities and federal commodities law. The company contends Tennessee’s enforcement intrudes on the Commodity Futures Trading Commission’s exclusive authority over derivatives trading on designated exchanges, claiming the state action is both field- and conflict-preempted under the Commodity Exchange Act.
The case reflects a broader national tension over sports-based prediction markets. Nine states, including Arizona, Illinois, Maryland, and New York, have issued cease-and-desist letters to Kalshi, while Connecticut previously imposed enforcement action that Kalshi successfully challenged temporarily. Courts have delivered mixed rulings: in late 2025, a federal judge in Nevada required Kalshi to comply with state gaming rules, rejecting the company’s CFTC-based preemption claims.
The Tennessee order represents the latest front in ongoing litigation over whether sports prediction contracts are regulated derivatives or unlicensed gambling. The federal court’s temporary block allows Kalshi to continue operating in Tennessee while the legal framework for state versus federal oversight is evaluated.
