Kalshi has sued the Tennessee Sports Wagering Council (SWC) in federal court after it, along with competitors Polymarket and Crypto.com, received a cease-and-desist letter from the gambling regulator that equated sports event contracts with illegal sports wagering.
In the suit, filed in U.S. District Court for the Middle District of Tennessee on Jan. 9, Kalshi asserted that it is at risk of irreparable harm if the SWC and the Tennessee Attorney General’s office pursue enforcement action against it, using similar language it has employed in court cases in other states. Tennessee AG Jonathan Skrmetti is named as a defendant alongside the SWC and SWC Executive Director Mary-Beth Thomas.
“As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it’s subject to exclusive federal jurisdiction,” Kalshi Head of Communications Elisabeth Diana told SBC Americas. “It is very different from what state-regulated sportsbooks and casinos offer their customers. Tennessee has nevertheless sought to regulate Kalshi under state law. It sent us a cease-and-desist letter earlier today, and we have now brought suit in federal court to stop this unlawful attempt.”
Judge Aleta Trauger granted Kalshi a temporary restraining order on Jan. 12, allowing the company to continue providing its sports event contracts in Tennessee.
Kalshi suggests Tennessee changed stance on sports contracts
Kalshi pointed to a letter that the SWC sent to the Commodity Futures Trading Commission (CFTC) in April 2025 which asked the federal regulator not to allow sports event contracts in the Volunteer State. The letter stated that Kalshi’s sports-event contracts constitute unlawful sports wagering under the Tennessee Sports Gaming Act.
“As the Commission reviews these sports events contracts, we ask that you respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts,” read the letter from Thomas.
Kalshi also noted that in June 2025 and December 2025, after the SWC sent its April letter, Skrmetti signed separate amicus briefs in the United States Court of Appeals. Both of these briefs were signed by attorneys general from dozens of states along with Skrmetti. Kalshi stated that in the first instance in New Jersey the brief argued that, absent preemption, Kalshi’s sports-event contracts would constitute regulated sports betting under the Tennessee Sports Gaming Act. In the second, Kalshi wrote, the AGs argued in the Maryland appeal that Kalshi’s event contracts constitute sports betting that is subject to the state gaming laws.
“This marks a significant shift from the SWC’s position in its April 2025 letter to the CFTC that acknowledged the CFTC’s jurisdiction over Kalshi’s event contracts,” wrote Kalshi. “Far from ‘ask[ing]’ the CFTC to ‘respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports event contracts,’ the December 2025 amicus brief asserts that states, and not the CFTC, have the sole power to regulate Kalshi’s sports-event contracts as a form of sports betting.”
Kalshi noted that the CFTC took no action in response to the SWC’s letter.
Kalshi reached out to AG before C&D
Kalshi also provided evidence in the court filing that it has reached out to Skrmetti’s office since the AG signed the second amicus brief in December.
In an email on Dec. 31, legal counsel for Kalshi asked the AG’s office to talk through its stance on sports contracts. The same Kalshi representative sent a follow-up on Jan. 6 asking the AG’s office to have a dialogue with the company’s counsel before filing litigation and noting that some other states “have opted to take a wait-and-see approach as the current litigation plays out” in other jurisdictions. The AG’s office responded on Jan. 6 by writing that there was nothing to share with the firm at that time.
Tennessee is part of the Sixth Circuit, which also includes Michigan, Kentucky and Ohio, where a case involving the Ohio Casino Control Commission and Kalshi is already pending. The Michigan Gaming Control Board (MGCB) is rumored to be considering enforcement action against prediction markets in the state as well.
Three days later, on Jan. 9, the SWC sent cease-and-desist letters to each of Kalshi, Polymarket and Crypto.com. The letter to Kalshi, included in the lawsuit filed by Kalshi the same day, demanded that Kalshi stop offering sports event contracts to Tennesseans immediately and refund Tennessee residents by no later than Jan. 31. Kalshi was then granted a TRO on Monday.
SBC Americas also reached out to the SWC and the Tennessee AG’s office for this story.
