State regulators say federally regulated event contracts still violate Tennessee gambling law
Tennessee regulators have taken decisive action against three major prediction market platforms, ordering them to stop offering sports-related event contracts to residents. The move underscores growing tension between federal derivatives oversight and state-level gambling regulation.
According to copies of the documents published by gaming attorney Daniel Wallach;
Tennessee Sports Betting Enforcement Action
The Tennessee Sports Wagering Council (SWC) issued cease-and-desist orders to Kalshi, Polymarket, and Crypto.com, demanding they immediately halt sports event contracts offered to users in the state. According to regulators, these products function as sports wagers and therefore require a state-issued sports betting license, which none of the firms currently hold.
The SWC stated that the platforms were operating in violation of the Tennessee Sports Gaming Act, despite being registered with the Commodity Futures Trading Commission (CFTC) at the federal level.
Under the orders, the companies must cease all Tennessee-based activity by January 31, void open contracts involving state residents, and refund all customer deposits. Failure to comply could result in civil penalties of up to $25,000 per violation and potential criminal referrals for aggravated gambling promotion, a felony offense under state law.
This action reflects a broader national trend, as states increasingly challenge prediction markets offering sports-related contracts. Regulators argue that federal derivatives approval does not override state gambling laws, setting the stage for continued legal and regulatory disputes across the U.S.
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