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Bonus TL;DR
- A federal appeals court recently allowed Tennessee regulators to advance their legal challenge against the prediction market operator Kalshi.
- The state attorney general anticipates future Supreme Court appeals while noting licensed sportsbooks generated massive recent wagering tax revenue.
A federal appeals court has allowed Tennessee to continue its case against Kalshi over sports-event contracts, handing the state a key procedural win in a closely watched fight over prediction markets and sports betting regulation.
The ruling matters because Tennessee argues Kalshi’s sports-event contracts should be treated like sportsbook products under state law, while Kalshi says its event contracts fall under federal oversight through the Commodity Futures Trading Commission. The decision does not mean Kalshi must immediately register as a Tennessee sportsbook or begin paying state sports wagering taxes, but it does let the state’s challenge move forward.
Appeals court revives Tennessee’s case against Kalshi
The dispute began after the Tennessee Sports Wagering Council told Kalshi to stop offering sports-event contracts to customers in the state. Kalshi had previously won an order from a federal judge in Tennessee blocking the state from taking action.
The appeals court reversed that position enough to let Tennessee proceed. According to the ruling summarized by NewsChannel 5, the Sixth Circuit focused specifically on Kalshi’s sports-event contracts, including markets tied to tournament winners, game statistics, soccer corner kicks, words spoken during sports broadcasts, and combinations of sports outcomes resembling parlays.
Tennessee Attorney General Jonathan Skrmetti said the state views the issue as a gambling-regulation question. “The states have the authority to regulate gambling,” Skrmetti said. He also argued Kalshi should not be able to avoid restrictions that apply to licensed sportsbooks.
Why the ruling matters for sportsbooks and prediction markets
The decision is limited to sports-event contracts and does not necessarily apply to Kalshi markets involving politics, economics, weather, entertainment, or other topics. That makes the ruling significant for sportsbooks and regulators watching whether sports-linked prediction products will be treated differently from traditional betting in state-regulated markets.
Skrmetti said licensed sportsbooks generated about $107.6 million in Tennessee sports wagering tax revenue during 2025, citing American Gaming Association analysis of Tennessee Sports Wagering Council data. He argued sports gambling is a major part of Kalshi’s business and said that affects state revenue when products are offered outside Tennessee’s sportsbook framework.
What comes next
The case now returns to continue on the merits, with additional appeals still possible. Skrmetti told NewsChannel 5 he expects prediction market operators to try to move similar disputes to the U.S. Supreme Court.
“It’s up to Kalshi how they want to handle this,” Skrmetti said. He added, “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.”
For now, the appeals ruling gives Tennessee a chance to keep pressing its argument that sports-event contracts should face the same rules as licensed sportsbooks in the state.
Source: As reported by newschannel5.com.
