Prediction Markets in Tennessee: Enjoined by a Federal Judge
Tennessee's Sports Wagering Council ordered Kalshi to stop offering sports event contracts in January 2026. Judge Aleta A. Trauger blocked the state from enforcing its gaming and criminal gambling statutes against Kalshi on February 19, 2026, on a $500,000 bond. That order has never been stayed. Tennessee appealed, and the Sixth Circuit hears argument July 30, 2026.
CONTESTED
What the state did
The Tennessee Sports Wagering Council sent Kalshi a cease-and-desist letter on January 9, 2026, signed by executive director Mary Beth Thomas and copied to Attorney General Jonathan Skrmetti and council chairman William Orgel. It demanded the exchange stop offering sports event contracts in Tennessee, refund state customers by January 31, and warned of criminal referral.
The letter reached sports event contracts and nothing else. Kalshi’s weather, election, economic and Federal Reserve markets were never named. Judge Trauger put it plainly in her opinion: “This case concerns Kalshi’s sports event contracts only.”
What the court did
Kalshi sued the same day the letter arrived. A temporary restraining order followed on January 12, and a preliminary injunction on February 19, 2026, conditioned on a $500,000 bond.
The order restrains three state officials in their official capacities, Orgel, Thomas and Skrmetti, from enforcing the Sports Gaming Act and Tennessee’s criminal gambling statutes against Kalshi. Tennessee never sought a stay from the Sixth Circuit, so the injunction has been continuously in force since February.
On the merits, Judge Trauger found Kalshi likely to succeed on the argument that its sports event contracts are swaps under the Commodity Exchange Act, reasoning that a team’s win is both an outcome and an occurrence of an event, and that the statute requires only association with a potential financial consequence.
Two federal courts, opposite results
Tennessee and Ohio produced conflicting district-court rulings inside the same circuit within eleven days of each other. Judge Trauger granted Kalshi an injunction on February 19. Chief Judge Morrison denied one in Ohio on March 9, on materially the same legal question.
That is a district-level split rather than an appellate one, and it is precisely why the Sixth Circuit paired the two appeals. The panel of Clay, Gibbons and Bloomekatz will hear both on July 30, 2026, with fifteen minutes for Kalshi and fifteen minutes shared between the state appellants.
The June 17 order consolidated the appeals “for submission.” The cases keep their own numbers and dockets.
Enforcement posture today
Frozen as to Kalshi, live on paper as to everyone else. The three named officials are enjoined. The cease-and-desist letter was never rescinded. At the February hearing, state counsel represented that Tennessee would not enforce it pending the ruling.
Tennessee’s own licensing regime remains fully operative for anyone not covered by the injunction. The Sports Gaming Act carries a $750,000 initial license fee, a 1.85% privilege tax, and escalating fines for unlicensed operation.
What Tennessee is arguing on appeal
The state’s civil appeal statement raises three questions: whether Kalshi’s suit properly invokes the doctrine permitting suits against state officials, whether sports event contracts are swaps under the Commodity Exchange Act, and whether the officials are preempted if the contracts are covered.
Litigation
KalshiEX LLC v. Orgel, No. 3:26-cv-00034 (M.D. Tenn.), Judge Aleta A. Trauger. Complaint filed January 9, 2026. Temporary restraining order January 12. Preliminary injunction February 19, 2026.
KalshiEX LLC v. Orgel, No. 26-5235 (6th Cir.), appeal by the three state officials. Notice of appeal March 20, 2026, docketed March 23. Consolidated for submission with the Ohio appeal.
Primary sources
Questions
Can I trade on Kalshi in Tennessee?
A federal injunction bars Tennessee's gaming officials and attorney general from enforcing state gambling law against Kalshi, and it has never been stayed. The state's cease-and-desist reached sports event contracts only and was never rescinded.
What did Tennessee actually order?
The Sports Wagering Council sent a cease-and-desist letter on January 9, 2026 demanding Kalshi stop offering sports event contracts, refund Tennessee customers by January 31, and warning of criminal referral. It was a letter, not a suit or a formal administrative order.
Why are Ohio and Tennessee heard together?
Two federal district courts inside the Sixth Circuit reached opposite conclusions on the same question eleven days apart. The Sixth Circuit consolidated the appeals for submission on June 17, 2026, and hears both on July 30.
Does the injunction protect other exchanges?
No. It runs to Kalshi. Tennessee's licensing regime and criminal gambling statutes remain fully operative as to anyone not covered by the order.