A Tennessee judge granted a preliminary injunction to prevent the state from taking enforcement action against Kalshi.

PANews reported on February 20th that, according to The Block, U.S. District Judge Aleta A. Trauger of the District of Tennessee granted a preliminary injunction to prevent state officials from enforcing local betting laws against the sports-related event contracts of prediction market platform Kalshi. In her ruling, Judge Trauger supported Kalshi's core argument, finding that its sports event contracts met the definition of swaps under the Commodity Exchange Act. The injunction applies to individual state officials, prohibiting them from taking enforcement action against Kalshi under the Tennessee Sports Betting Act during the proceedings. Previously, Tennessee regulators had issued a cease and desist letter to Kalshi, alleging that it was operating without a state license. The judge ruled that Kalshi could not simultaneously comply with state licensing requirements and CFTC rules, and that state-level regulation would interfere with uniform federal regulation of the derivatives market.

Andrew Kim posted on the X platform that, unlike the Nevada ruling, Judge Trauger considered Kalshi's event contracts to be swaps. Due to differing viewpoints, such cases may ultimately reach the Supreme Court. Currently, the Maryland and Nevada district courts have rejected Kalshi's injunction applications, while New Jersey has granted them. According to The Block's data dashboard, Kalshi is the largest prediction market exchange by trading volume, processing over $9.5 billion in January.