Kalshi Sues Tennessee Over Cease-and-Desist Order
Kalshi is suing the Tennessee Sports Wagering Council (SWC) after the regulator issued a cease-and-desist order to the prediction market platform.
Tennessee Becomes Sixth State Sued By Kalshi
The SWC issued cease-and-desist orders to Kalshi, Polymarket, and Crypto.com on Friday, alleging the prediction markets were operating in violation of state laws.
Tennessee’s SWC sent the letters individually to Tarek Mansour, CEO of Kalshi; Kevin J. Dan, chief compliance officer and chief regulatory officer of Crypto.com; and to Polymarket.
According to court documents obtained by gaming attorney Daniel Wallach, the lawsuit “challenges the State of Tennessee’s intrusion into the federal government’s exclusive authority to regulate derivates trading on exchanges overseen by the Commodity Futures Trading Commission.”
Kalshi’s lawsuit was issued in the United States District Court for the Middle District of Tennessee. The company’s request for a temporary restraining order was granted by the Tennessee District Court.
The operator already has multiple ongoing lawsuits against other state regulators nationwide.
Tennessee becomes the sixth state Kalshi has sued in federal court, including Nevada, New Jersey, Maryland, New York, and Connecticut.
Kalshi Seeks Motion For Preliminary Injunction
Kalshi is seeking a motion for preliminary injunction and has requested an emergency hearing. The hearing on preliminary injunction is scheduled for Jan. 26.
As a prediction market, Kalshi is federally regulated by the Commodity Futures Trading Commission. State regulators only had a problem with the platform when it started offering sports betting contracts, including prop bets and parlays.
This is mainly because Kalshi wasn’t licensed by the states, and the company wasn’t paying the required state sports betting taxes like other legal sportsbooks.
“Defendants’ conduct leaves no doubt that Defendants intend to seek enforcement against Kalshi unless Kalshi stops offering its sports-event contracts—which, again, are offered for trade on its federally regulated exchange without objection from the CFTC—in Tennessee. In doing so, Defendants would seek to subject Kalshi to the patchwork of state regulation that Congress created the CFTC to prevent, and to interfere with the CFTC’s exclusive authority to regulate derivatives trading on the exchanges it oversees,” Kalshi counsel noted in the lawsuit.
Tennessee Requires License For Sports Betting
The SWC made it clear in its cease-and-desist order to Kalshi that “interactive sports wagering” can only be offered by state-licensed operators.
“The sports events contracts offered on [the prediction platform’s] exchange are not compliant with these protections (and many others) and are an immediate and significant threat to the public interest of Tennessee,” the letter reads.
“Even if it did offer these protections, [the prediction platform] does not have the required license issued by the SWC and does not pay the privilege tax mandated by statute.”
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 prediction platforms fail to meet their demands.
Tags/Keywords
Players trust our reporting due to our commitment to unbiased and professional evaluations of the iGaming sector. We track hundreds of platforms and industry updates daily to ensure our news feed and leaderboards reflect the most recent market shifts. With nearly two decades of experience within iGaming, our team provides a wealth of expert knowledge. This long-standing expertise enables us to deliver thorough, reliable news and guidance to our readers.
Latest News
