A federal district judge has temporarily blocked Tennessee’s Attorney General and the Tennessee Sports Wagering Council from enforcing the state’s gaming and sports wagering laws against Kalshi.
Kalshi is an online sports betting platform rebranded as a “prediction market.” It allows individuals to purchase event contracts, presented as binary options, to wager on their prediction of the outcome of an event. This includes the ability to wager on sports events. The winning prediction then receives a payout upon the expiration date.
Tennessee sent Kalshi a cease-and-desist on January 9, 2026, for violating the state’s sports betting laws. Kalshi then sued the Sports Wagering Council and Tennessee Attorney General in federal court, claiming the state does not have the authority to regulate Kalshi’s sale of event contracts—even if they are related to sporting events.
A temporary restraining order was then placed on Tennessee, with the federal district judge stating in the order that Kalshi is likely to win the case.
Arguments on Kalshi’s request for a court order to block Tennessee from enforcing its own laws, before the trial for the final decision, will be held on January 26, 2026.
A federal district court in Nevada ruled differently last year in a similar case against Kalshi. In his order to dissolve the preliminary injunction granted in favor of Kalshi, the federal district judge pointed out that Kalshi offers an avenue for sports betting that is not under the exclusive jurisdiction of the Commodities Futures Trading Commission. The judge explained that Kalshi’s argument relies on a strained interpretation of federal laws, upsetting decades of precedent, and cannot be sustained.
Kalshi appealed the Nevada ruling to the U.S. 9th Circuit Court of Appeals in December.
New Jersey also appealed its case against Kalshi to the U.S. 3rd Circuit Court of Appeals, which held oral arguments in September of last year. A letter was jointly filed in June 2025 by 34 other states, the District of Columbia, and the Northern Mariana Islands in support of New Jersey, but Texas notably did not join.
Maryland also appealed its case against Kalshi to the U.S. 4th Circuit Court of Appeals and is still in the briefing process. Another letter was jointly filed in December by 38 other states in support of Maryland, but Texas again did not join.
Online gambling, rebranded as “prediction markets,” has proliferated in recent years. Kalshi is currently providing an avenue for Texans to participate in online sports betting. While multiple other states have taken Kalshi to court over violations of state gambling laws, Texas has not.
Under the Texas Constitution, gambling is illegal unless an exception is made by the legislature. Gambling is defined as “an agreement to win or lose something of value, solely or partially by chance.”
Kalshi contends that the Commodity Exchanges Act, passed by Congress, gives the Commodities Futures Trading Commission discretion to reject the trading of sporting event-related contracts and supersedes all state gambling laws.
As previously reported, online sports betting is prolific among younger populations. Scientific literature reports that those who engage in internet gambling have the highest risk of developing a gambling disorder.
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