void would be logistically difficult, and Kalshi would lose money by refunding some deposits because of the way the trading on Kalshi is collateralized. (Doc. No. 9, Sottile Decl. ¶¶ 18–38.) Kalshi further argues that cancelling contracts may jeopardize its compliance with CFTC regulations, and therefore its status as a DCM—in particular the requirement that Kalshi offer impartial access and prevent market manipulation and price distortion. ( Id. ¶¶ 49–56 (first citing 17 C.F.R. § 38.250; and then citing 17 C.F.R. § 38.151(b)).) 19 In addition, Kalshi argues that it would face reputational injuries. (Doc. No. 7 at 30–31.) As the Sixth Circuit recently held, losing access to thousands of users and reputational harm suffice for irreparable harm. Churchill Downs , 162 F.4th at 643; accord Kalshi D.N.J. , 2025 WL 1218313, at *7 (“Kalshi has identified harms to its reputation and goodwill that are both likely without injunctive relief and not able to be remedied following trial.”). The defendants respond that Kalshi’s harms are “speculative at best,” because (1) its sports event contracts make up only a portion of its business; (2) Kalshi has not shown that its Tennessee users would stop using Kalshi; (3) Kalshi could “easily comply with both Tennessee law and the CEA if it wanted to,” and any logistical burdens are the cost of doing business in Tennessee; and (4) other courts have already denied Kalshi’s motions for a preliminary injunction, so “any reputational harm has already occurred.” (Doc. No. 34 at 40–41.) 19 The court notes, however, that Kalshi has not presented evidence that the CFTC would likely take adverse action against Kalshi “for complying with court orders . . . while the various lawsuits play out.” Kalshi D. Nev. II , 2025 WL 3286282, at *12. If anything, Kalshi has presented evidence showing the CFTC’s solicitude to the sports event contracts industry. See Doc. No. 44- 1, Remarks of Chairman Michael S. Selig, The Next Phase of Project Crypto: Unleashing Innovation for the New Frontier of Finance at 6 (Jan. 29, 2026) (“I have directed CFTC staff to withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts[.]”); see also 91 Fed. Reg. at 5386 (withdrawing proposed rule published at 89 Fed. Reg.).
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Case 3:26-cv-00034 Document 48 Filed 02/19/26 Page 22 of 25 PageID #: 890
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