Key Notes
- Tennessee ordered Kalshi to stop offering sports event contracts.
- A court order called the operations illegal gambling without a state license.
- Kalshi sued the authorities and the platform is allowed to operate till a preliminary hearing scheduled for January 26.
Tennessee regulators tried to block Kalshi from offering sports event contracts in the state. The Tennessee Sports Wagering Council sent a cease-and-desist letter ordering the platform to stop operations, void all open contracts, and refund users by Jan. 31.
However, Kalshi responded by suing the state. A federal judge temporarily halted Tennessee’s enforcement of the order while the case proceeded. The court ruled that Kalshi would suffer serious harm if forced to shut down and said the company is likely to win on its core legal claims. The injunction allows Kalshi to continue freely operating in Tennessee until a preliminary hearing set for Jan. 26.
Kalshi vs. Tennessee
The Tennessee Sports Wagering Council claimed that Kalshi was offering sports wagering without a state license. It warned of fines of up to $25,000 per violation and possible referral to law enforcement if the order was ignored.
On the other hand, Kalshi argued it falls under federal oversight as a registered derivatives exchange. The company said that the Commodity Futures Trading Commission has exclusive authority over its event contracts.
Tennessee disagreed. Regulators believe the state’s Sports Gaming Act applies and that Kalshi’s products meet the legal definition of gambling when tied to sports outcomes. The dispute leaves the platform operating in a legal gray zone.
Crackdown Spreads across Markets
Kalshi was not the only target. Tennessee sent similar cease-and-desist letters to Kalshi rival Polymarket and exchange Crypto.com, claiming all three offered illegal sports wagering without state approval.
Moreover, Congressman Ritchie Torres is also moving forward with a bill that would prevent government officials from betting on prediction markets on government actions or political outcomes.
Lawmakers possess sensitive information, and as a result, federal elected officials, political appointees, executive branch employees, and congressional staff should be barred from participating, Torres believes.
It is also important to note that Ukraine has limited access to Polymarket. The block was ordered by the national electronic communications regulator (NCEC) under Resolution No. 695.
The authorities allege that the betting platform doesn’t have the necessary licenses for operating in the region.
