Tennessee Filed Opposition to Kalshi’s Motion for Preliminary Injunction
The state of Tennessee on Tuesday filed a response to Kalshi’s request for a preliminary injunction that would block the state from enforcing a cease-and-desist letter against the prediction platform.
Tennessee Cannot Enforce Its Cease-And-Desist Just Yet
Kalshi received a temporary restraining order last week, which means Tennessee cannot enforce its cease-and-desist until a decision is made on the injunction.
According to gaming lawyer Daniel Wallach, the state said in its response that Kalshi’s harm is “self-inflicted” and that the operator is coming to court with “unclean hands.”
“Kalshi has self-certified its sports-event contracts, even though contracts involving, related to, or referencing ‘gaming’ or activities unlawful under state law are explicitly prohibited under 17 C.F.R. § 40.11(a). See supra at 6-7,” the court document reads.
“Therefore, any harm Kalshi has suffered or will suffer is of its own making. Kalshi should not be able to hide behind the self-certification process and claim harm when a state enforces its laws. This Court should deny Kalshi the relief it seeks because it has approached the Court with unclean hands.”
The Tennessee Sports Wagering Council (SWC) sent cease-and-desist letters to Kalshi, Polymarket, and Crypto.com on Jan. 9, ordering the prediction platforms to stop offering sports betting contracts in the state. Kalshi then sued that same day.
Prediction Market Operators Lack Sportsbook Licenses
The cease-and-desist letters were sent individually to Tarek Mansour, CEO of Kalshi; Kevin J. Dan, chief compliance officer and chief regulatory officer of Crypto.com; and to Polymarket.
In the Volunteer State, “Interactive sports wagering” is defined as “placing a wager on a sporting event contract via the internet, a mobile device, or other telecommunication platform.”
The SWC made it clear that “Interactive sports wagering” can only be offered by state-licensed operators.
The SWC is demanding that Kalshi void all pending sports events contracts that were entered into by Tennessee residents, and refund all funds on deposit to any person located in the state no later than Jan. 31.
The SWC threatened to impose fines of $10,000 for the first offense, $15,000 for the second offense, and $25,000 for a third or subsequent offense, injunctive relief, and a referral to law enforcement if the platforms fail to meet their demands.
A hearing on the injunction is scheduled for Monday, Jan. 26.
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