A U.S. federal judge has temporarily halted the Tennessee state's injunction against Kalshi.

A U.S. federal judge has temporarily halted a cease-and-desist order from Tennessee-mandated prediction market operator Kalshi to close its sports betting contracts in the state, freezing a cease-and-desist notice. The court will consider whether the company's platform, regulated by the U.S. Commodity Futures Trading Commission (CFTC), should be exempt from state gambling laws. The order, signed Monday, suspends enforcement actions by the Tennessee Sports Betting Commission and the state attorney general. Previously, regulators ordered Kalshi, Polymarket, and Crypto.com to cease offering sports-related contracts to Tennessee residents and to cancel open contracts and refund customer deposits by January 31. Tennessee officials initially warned of potential fines of up to $25,000 per violation and possible referral to law enforcement. Kalshi countered that the dispute was a jurisdictional conflict between state gambling enforcement and federal commodity laws. In its federal complaint, the company argued that Tennessee's actions violated the CFTC's "exclusive jurisdiction" over derivatives trading on designated exchanges, and countered that the state's threatened enforcement action was preempted by the Commodity Exchange Act. (The Block)