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<\/p>\nNASHVILLE, Tenn. (WTVF) \u2014 Tennessee has won a major round in its legal fight with prediction market company Kalshi, strengthening the state\u2019s ability to regulate sports-related contracts offered on the platform.<\/p>\n
Prediction markets allow users to put money on whether a future event will occur. The available markets can involve entertainment, politics, weather and numerous other subjects. However, Tennessee\u2019s court fight with Kalshi focused specifically on contracts involving sporting events.<\/p>\n
\u201cThe states have the authority to regulate gambling,\u201d Tennessee Attorney General Jonathan Skrmetti told NewsChannel 5.<\/p>\n
The fight came down to a simple question: Who gets to regulate sports betting on prediction markets?<\/p>\n
Kalshi argued federal regulators were in charge.<\/p>\n
Tennessee argued the state still had the authority to enforce its gambling laws.<\/p>\n
Last week, a federal appeals court sided with Tennessee and cleared the way for the state to continue its case against the company<\/p>\n
Tennessee argues Kalshi should follow sportsbook rules<\/p>\n
Tennessee\u2019s licensed sportsbooks, including FanDuel and DraftKings, must follow state requirements covering taxation, consumer protections and responsible gambling.<\/p>\n
Skrmetti argues Kalshi is not currently required to follow those same rules because it operates outside Tennessee\u2019s licensed sports wagering system. \u201cYou can\u2019t just dodge these restrictions because it makes you some extra money and it makes it easier,\u201d Skrmetti said. \u201cThat\u2019s just not right.\u201d<\/p>\n
One of those protections allows people with gambling addictions to voluntarily block themselves from placing future wagers through licensed Tennessee sportsbooks. Skrmetti\u2019s office says prediction markets are not currently required to participate in that system.<\/p>\n
The Attorney General also argues the arrangement has financial consequences for Tennessee. \u201cSports gambling is a huge part of what they\u2019re doing, and that means a lot of money that Tennessee is missing out on,\u201d Skrmetti said.<\/p>\n
Licensed sportsbooks generated approximately $107.6 million in Tennessee sports wagering tax revenue during 2025, according to the American Gaming Association\u2019s analysis of Tennessee Sports Wagering Council data. Tennessee taxes licensed sportsbooks based on the amount wagered rather than operators\u2019 revenue after paying winners. <\/p>\n
Kalshi is not subject to that same Tennessee sports wagering tax structure.<\/p>\n
Tennessee officials argue that more sports wagering revenue could mean more money for state priorities like schools and roads.<\/p>\n
Kalshi argues federal regulation takes priority<\/p>\n
Kalshi has argued that its event contracts are regulated federally through the Commodity Futures Trading Commission and are not subject to Tennessee\u2019s sports betting laws.<\/p>\n
The dispute began after the Tennessee Sports Wagering Council told Kalshi to stop offering sports-event contracts to customers in the state. Kalshi then sued Tennessee officials and argued that the federal Commodity Exchange Act prevented the state from enforcing its gambling laws against the company. <\/p>\n
Kalshi initially convinced a federal judge in Tennessee to block the state from taking action against the company.<\/p>\n
But that changed when a federal appeals court sided with Tennessee and allowed the state’s case to move forward. “It’s up to Kalshi how they want to handle this,” Skrmetti said.<\/p>\n
The ruling doesn’t mean Kalshi suddenly has to register as a Tennessee sportsbook or start paying state sports wagering taxes.<\/p>\n
What it does mean is Tennessee can continue arguing that Kalshi should have to follow the same rules as the state’s licensed sportsbooks while the lawsuit continues.<\/p>\n
Ruling is limited to sports-event contracts<\/p>\n
The decision does not declare that every prediction market offered by Kalshi is subject to Tennessee gambling law.<\/p>\n
The lawsuit and the Sixth Circuit\u2019s analysis focused on Kalshi\u2019s sports-event contracts. The opinion discussed contracts involving tournament winners, game statistics, soccer corner kicks, words spoken during sports broadcasts and combinations of sports outcomes resembling parlays.<\/p>\n
The ruling does not necessarily affect Kalshi\u2019s markets involving politics, economics, weather, entertainment or other subjects.<\/p>\n
Could the case reach the Supreme Court?<\/p>\n
The legal fight may not be over.<\/p>\n
Skrmetti told NewsChannel 5 he expects prediction market companies to keep appealing and eventually try to get the case before the U.S. Supreme Court. “I think we’re going to see efforts by the prediction markets to get these cases up to the Supreme Court as quickly as possible,” Skrmetti said.That’s because courts around the country haven’t all reached the same conclusion. While the Sixth Circuit sided with Tennessee and Ohio, other federal courts have ruled differently in similar disputes involving prediction markets. <\/p>\n
Those conflicting decisions could make Supreme Court review more likely, though the high court would not be required to take the case.<\/p>\n
If the dispute does end up before the nation’s highest court, Skrmetti says Tennessee will be ready. “I think we have a very strong case to make up there on behalf of the state,” Skrmetti said.<\/p>\n
Do you have more information about this story? You can email me at Chris.Davis@NewsChannel5.com.<\/p>\n
<\/p>\n
The skies were closed on 9\/11. A Nashville phone call helped save a baby\u2019s life<\/p>\n
September 11, 2001 is a day most associate with terror and tragedy. Austin Pollack shares a story from that day about hope and persistence: the effort to save a little girl\u2019s life \u2013 with an organ donation. The problem? The young patient was in Houston, and her life-saving liver here in Nashville. With the grounding of all civilian aircraft, how could it be done? \u201cNobody ever said this isn\u2019t possible.\u201d<\/p>\n
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