TLDR A federal judge in Tennessee granted Kalshi a preliminary injunction, blocking state officials from enforcing local sports betting laws against it. Judge Trauger ruled Kalshi’s sports event contracts qualify as swaps under the Commodity Exchange Act (CEA), giving them federal protection. The court found Kalshi cannot comply with both state licensing rules and CFTC regulations at the same time. Courts in Maryland and Nevada have denied Kalshi similar injunctions, while New Jersey and now Tennessee have granted them. The CFTC has also filed a brief asserting exclusive federal jurisdiction over prediction markets in a related case.
Prediction market platform Kalshi won a key legal battle in Tennessee on February 19, 2026. A federal judge blocked state officials from enforcing local sports gaming laws against the company.
FEDERAL JUDGE SIDES WITH KALSHI
U.S. District Judge Trauger granted Kalshi an injunction blocking Tennessee from enforcing betting law.
The court said Kalshi is likely to win, ruling its sports contracts qualify as swaps under federal law and may override state regulation. pic.twitter.com/gr52eQWuBm
— Coin Bureau (@coinbureau) February 20, 2026
U.S. District Judge Aleta Trauger granted Kalshi a preliminary injunction. This came five weeks after she issued a temporary restraining order against Tennessee gaming regulators.
The core question was whether Kalshi’s sports event contracts count as regulated swaps under federal law. Judge Trauger ruled they do, placing them under the Commodity Exchange Act (CEA).
Kalshi is regulated by the Commodity Futures Trading Commission (CFTC). It argues its contracts are federally governed and not subject to state sports betting laws.
Tennessee regulators disagreed. They had sent Kalshi a cease-and-desist letter, saying the platform was operating without a state license under the Tennessee Sports Gaming Act.
Kalshi filed suit last month in response. It asked the court for declaratory