Catenaa, Friday, February 27, 2026- A federal judge in Tennessee granted a preliminary injunction preventing state officials from enforcing local sports betting laws against Kalshi, citing the platform’s sports-related event contracts likely qualify as swaps under the Commodity Exchange Act.
US District Judge Aleta A. Trauger ruled Thursday that Kalshi is likely to succeed in arguing its binary event contracts fall under exclusive federal jurisdiction, preempting state gambling regulations.
The injunction bars individual officials from enforcing Tennessee’s sports gaming rules while litigation continues.
Kalshi, regulated by the Commodity Futures Trading Commission, offers contracts allowing users to wager on outcomes including sports results, Supreme Court decisions, and weather events.
The platform has faced challenges in multiple states claiming unlicensed sports wagering, while arguing federal law governs its offerings.
The court found that outcomes of sports events can constitute “occurrences” and that associated financial consequences, such as increased merchandise sales, satisfy federal swap requirements.
The ruling also noted Kalshi cannot comply simultaneously with state licensing and CFTC regulations without undermining uniform federal oversight.
Legal experts note the decision diverges from Nevada, where similar contracts were denied swap classification, highlighting inconsistencies across jurisdictions.
Other states, including New Jersey, have issued injunctions, while rulings remain pending in Ohio, New York, and Connecticut.
Kalshi continues to lead the US prediction market sector, processing over $9.5 billion in January 2026, according to The Block data.
The case underscores ongoing tensions between federal oversight and state-level gambling laws as courts address the growing influence of prediction markets.
