A US federal judge in Tennessee has temporarily blocked the state from enforcing its gambling laws against Kalshi’s sports event contracts, allowing the prediction markets operator to continue offering those products while its lawsuit moves forward.

Judge Aleta Trauger of the US District Court for the Middle District of Tennessee ruled that Kalshi is likely to succeed in arguing that federal commodities law overrides the state’s attempt to regulate its sports contracts as illegal gambling. The order prevents Tennessee officials from pursuing enforcement actions tied to those contracts during the litigation.

In her decision, Trauger concluded that Kalshi’s sports event contracts qualify as “swaps” under the Commodity Exchange Act. Because the Act grants the US Commodity Futures Trading Commission exclusive authority over such instruments, the court found that Tennessee’s enforcement efforts are likely preempted under conflict preemption principles.