Tennessee Judge Rules It’s Legitimate Finance, Not Gambling, Sides With Kalshi

▲ Virtual assets, regulation, lawsuit/AI-generated image

A U.S. court in Tennessee has granted an injunction against the state’s attempt to regulate prediction market platform Kalshi, ruling that the move violated federal law.

According to cryptocurrency media outlet Cointelegraph on February 21 (local time), Judge Eli Richardson of the U.S. District Court for the Middle District of Tennessee halted the state’s enforcement action against Kalshi, recognizing the supremacy of the federal Commodity Exchange Act. Judge Richardson made clear that Kalshi’s activities, approved by the Commodity Futures Trading Commission (CFTC), fall within a federal regulatory framework that supersedes state law. The court determined that the state’s attempt to classify prediction markets as gambling and impose sanctions infringed upon lawful commercial rights protected under federal law.

The ruling is expected to serve as a significant precedent in the ongoing conflict between state and federal authorities over regulatory power surrounding virtual assets and prediction markets. Kalshi has already solidified its position in the U.S. after winning a federal court decision affirming that “operating a prediction market does not run counter to the public interest.” Judge Richardson emphasized that Tennessee’s claims effectively sought to undermine the federal regulatory system, underscoring that the state’s intervention was inappropriate.

The virtual asset industry anticipates that this decision will enable prediction market platforms to move beyond state-level regulatory risks and achieve more stable growth. Platforms such as Kalshi and Polymarket have drawn attention, particularly during election cycles and major macroeconomic turning points, as reliable sources of data reflecting collective intelligence. The ruling is expected to significantly curb efforts not only in Tennessee but also in other regions to classify prediction markets as gambling.

Market experts expect the decision to accelerate efforts to unify virtual asset regulations, especially amid discussions surrounding the introduction of the U.S. cryptocurrency market structure bill, known as the CLARITY Act. Beyond simple wagers on outcomes, prediction markets have once again received legal recognition as innovative tools that enhance financial market efficiency. Observers widely believe that a legal foundation is being established to allow various virtual asset-based derivatives to be traded transparently within the institutional framework.

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