A federal court has granted Kalshi a temporary restraining order (TRO) that allows it to keep operating in Tennessee. The decision was made just days after the prediction market received a cease-and-desist letter.
The order was issued by the District Court for the Middle District of Tennessee Monday evening, after the case was filed Friday, the same day that the state issued a cease-and-desist to Kalshi, as well as rival prediction markets Polymarket and Crypto.com, arguing the platform is in violation of Tennessee’s Sports Wagering Act.
022-TRO-1Speedy turnaround
The TRO decision in this case has been faster than in Kalshi’s lawsuits against other states.
The expeditious turnaround may have been due to emails — provided as evidence by Kalshi alongside its initial complaint — that showed the state intended to enforce its cease-and-desist while the court decided on whether to issue an injunction.
Kalshi-extra-exhibitsIn an email to Kalshi, provided by the prediction market alongside its complaint, Assistant Attorney General Michael N. Wennerlund wrote that the state “will not be staying enforcement pursuant to your request.”
In contrast, other states have agreed to wait on enforcing their cease-and-desist letters until a decision is made on the injunction.
The TRO will last until a hearing is held on whether to grant Kalshi a preliminary injunction. That hearing will take place Jan. 26, suggesting a faster movement on the injunction decision than is typical for other states as well.
Judge says Kalshi likely to succeed on merits
The standard to issue a TRO is usually lower than a preliminary injunction, as the orders are intended as emergency moves and thus often need to be decided quickly.
The judge, Aleta Trauger, wrote, “Plaintiff [Kalshi] is likely to succeed on the merits of its claims,” but did not outline an explanation. Kalshi explained its arguments in its opening complaint, but Tennessee has not yet had a chance to respond.
Trauger added that Kalshi “will suffer irreparable injury and loss” if the state enforces its Sports Wagering Act against the business.
Kalshi’s initial complaint to the court also provided an insight into the platform’s state-level persuasion tactics, as the prediction market revealed that it enlisted a former state attorney general and a former deputy attorney general in its efforts to encourage Tennessee to adopt a “wait-and-see approach” to the platform.
In an email, Robert Cooper — a former Tennessee attorney general who is now a lawyer with Tennessee-based firm Bass, Berry & Sims, which represents Kalshi — asked for “dialogue” with the office he used to lead.
In response, Chief Deputy Attorney General Lacey Mace said, “I don’t have anything to share with Kalshi at this time.” The email was sent less than three days before the state sent its cease-and–desist letters.
