Tennessee judge grants preliminary injunction blocking state enforcement against Kalshi

U.S. District Judge Aleta A. Trauger granted a preliminary injunction in Tennessee, stopping state officials from enforcing local sports gaming laws against the prediction markets platform Kalshi while litigation proceeds. The judge sided with Kalshi, concluding the platform is likely to succeed in arguing its sports event contracts qualify as swaps under the Commodity Exchange Act (CEA), thus falling under exclusive federal jurisdiction and preempting state gambling regulations. The ruling addressed state arguments by stating an event's "outcome" can be an "occurrence" and that the "downstream consequences" of sports outcomes satisfy the CEA's financial consequence requirement. The court also found that Kalshi cannot simultaneously comply with both state licensing and CFTC rules without frustrating uniform federal regulation. This decision adds to a patchwork of rulings across states, with appellate litigator Andrew Kim noting the divergence from a Nevada ruling and suggesting the case may head to the Supreme Court.

(Source：The Block)