A federal judge in Tennessee has stepped in to stop state regulators from acting against Kalshi for now. This decision gives the event contract platform temporary relief while the legal fight continues.
The ruling came on Monday from US District Judge Aleta Trauger. She approved Kalshi’s request for a preliminary injunction and restraining order. This blocks the Tennessee Sports Wagering Council and the state’s attorney general from enforcing a cease and desist order.
Judge Trauger said Kalshi could face serious and permanent harm if the state is allowed to move forward right now. She also noted that Kalshi appears likely to win its case based on the arguments presented so far.
Earlier this month, Tennessee regulators took action against Kalshi, Polymarket, and Crypto.com. The platforms were told to immediately stop offering sports related contracts to people in the state. They were also ordered to refund all user deposits by January 31.
The Tennessee Sports Wagering Council sent formal letters to the companies. The letters accused them of offering sports betting products without proper licenses. Regulators warned that each violation could lead to civil fines of up to $25,000.
Kalshi responded quickly. The company filed a lawsuit against the Council, its chair William Orgen, executive director Mary Beth Thomas, and Attorney General Jonathan Skrmetti.
Kalshi argues that it is not a gambling company under state law. It claims its contracts fall under the authority of the Commodity Futures Trading Commission. According to Kalshi, only federal regulators have the power to oversee its operations.
The company said Tennessee is trying to interfere with a federal system created by Congress. That system is meant to regulate derivatives trading on approved exchanges.
Because of the judge’s ruling, the Tennessee case is now paused. Kalshi can continue operating in the state for the time being. A key hearing on the preliminary injunction is scheduled for January 26.
Kalshi is dealing with similar legal battles in other states as well. In recent months, it has used the same defense. The company says its event based markets are financial products, not traditional bets.
In New York, regulators sent Kalshi a cease and desist letter on October 24. Just three days later, Kalshi filed a federal lawsuit in response. It argued that New York’s actions could cause immediate and lasting damage to its business and users.
Kalshi also claimed that New York officials were stepping into an area reserved for federal oversight under the Commodity Exchange Act.
The results so far have been mixed. Judges in Nevada and New Jersey sided with Kalshi temporarily. They paused state enforcement while the cases move forward.
Maryland told a different story. A judge there denied Kalshi’s request for relief. The court said federal derivatives law does not cancel a state’s right to regulate gambling.
Even with mounting legal pressure, Kalshi continues to attract strong investor interest. The company has raised $300 million from major backers like Andreessen Horowitz and Sequoia Capital.
This funding came on top of a $185 million raise earlier in 2025. That round was led by Paradigm.