A federal judge has temporarily stopped Tennessee regulators from taking enforcement action against prediction markets platform Kalshi.
The ruling allows Kalshi to continue operating in the state while its lawsuit against regulators proceeds.
Judge Aleta Trauger granted Kalshi’s request for a temporary restraining order and preliminary injunction.
The judge said Kalshi would suffer irreparable harm if the state’s actions were allowed to continue.
She added that Kalshi is likely to succeed on the merits of its legal claims.
Tennessee regulators had ordered Kalshi to stop offering sports event contracts in the state.
The Tennessee Sports Wagering Council accused Kalshi of offering unlicensed sports wagering products.
Regulators also demanded the voiding of existing contracts and refunds to users by January 31.
The state warned that fines of up to $25,000 per violation could be imposed.
Kalshi filed suit against the council, its leadership and Tennessee Attorney General Jonathan Skrmetti.
The company argued that it falls under the exclusive jurisdiction of the Commodity Futures Trading Commission.
Tennessee’s intent to regulate Kalshi intrudes upon the federal regulatory framework that Congress established.
Kalshi said.
Kalshi has raised similar arguments in legal challenges against other states.
Courts in Nevada and New Jersey have previously sided with Kalshi in comparable disputes.
A judge in Maryland, however, declined to block state action in a separate case.
The Tennessee injunction will remain in place until a court hearing scheduled for January 26.