In a significant legal win, Kalshi, the event contract platform, has secured a temporary injunction against the Tennessee Sports Wagering Council, staving off enforcement actions by the state’s regulator for now. The ruling, issued by US District Judge Aleta Trauger, grants Kalshi the legal ability to continue its operations in Tennessee as it defends itself against accusations of unauthorized sports wagering.
Key Details on the Legal Battle
The conflict began earlier this month when Tennessee regulators accused Kalshi, along with platforms like Polymarket and Crypto.com, of offering sports-related contracts without the required licenses. Cease-and-desist letters demanded an immediate halt to their services and user refunds, threatening civil fines of up to $25,000 per violation.
Kalshi fired back, asserting that its operations fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), not state gambling agencies. Judge Trauger sided with Kalshi for now, ruling the platform may suffer “irreparable injury and loss” if the enforcement proceeded, and that the platform was “likely to succeed on the merits” of its claims.
Implications of the Ruling
Tennessee’s attempt to regulate Kalshi has broader implications for federal versus state jurisdiction in the financial and gambling sectors. Kalshi has faced similar challenges in other states including New York and Maryland, with mixed results. While federal judges in Nevada and New Jersey issued rulings in its favor, a Maryland judge recently denied its request for preliminary relief.
Kalshi’s Investment Growth Despite Legal Scrutiny
Amid the mounting legal challenges, Kalshi has continued to attract investor confidence. With $300 million in funding backed by industry giants like Andreessen Horowitz and Sequoia Capital, the company remains on solid financial footing to defend its innovative event-based marketplace.
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Stay tuned for more updates on this ongoing case as the preliminary injunction hearing is set for January 26.
