Tennessee Cracks Down on Sports Prediction Contracts
In a significant regulatory move, Tennessee authorities have ordered Kalshi, Polymarket, and Crypto.com to immediately halt offering event-based financial contracts tied to sports outcomes to state residents. The action underscores growing scrutiny over the legal boundaries of prediction markets.
Operating Without Authorization
While these platforms are registered with the U.S. Commodity Futures Trading Commission (CFTC), Tennessee’s State Wide Coalition (SWC) emphasized that under the state’s Sports Gaming Act, any entity accepting wagers on athletic events must hold a local license—none of the three companies possess one.
‘The contracts offered function as de facto sports bets,’ the agency stated. ‘Without proper authorization, these operations violate state law and are therefore unlawful.’
Strict Deadline and Enforcement Measures
- Cease all Tennessee-related activities by January 31;
- Close or cancel open positions held by state residents;
- Refund all deposited funds;
- Failure to comply may result in civil penalties of up to $25,000 per violation.
Additionally, continued operation could lead to criminal prosecution under aggravated promotion of gambling—a felony offense in Tennessee.
Broader Implications for Digital Markets
This enforcement highlights the fragmented regulatory landscape across U.S. states. Even federally recognized platforms may face legal hurdles at the state level. The case may set a precedent for how prediction markets navigate regional compliance, prompting strategic reassessments among emerging fintech services.