Tennessee’s regulator has ordered prediction market platforms Kalshi, Polymarket, and Crypto.com to cease providing sports-related contracts within the state.
Key Takeaways:
- Tennessee ordered Kalshi, Polymarket and Crypto.com to halt sports-related contracts and challenge refunds by Jan. 31, 2026.
- Regulators allege the platforms are providing unlicensed sports activities wagering in violation of state legislation.
- Failure to conform may lead to steep fines and potential prison referrals.
In cease-and-desist letters filed on January 9, the Tennessee Sports activities Wagering Council (SWC) directed the three corporations to instantly halt sports activities occasion contracts provided to Tennessee clients, void all current contracts entered into by state residents, and refund all buyer funds by January 31, 2026.
Tennessee Regulator Accuses Prediction Markets of Unlicensed Sports activities Wagering
The regulator accused the platforms of working unlicensed sports activities wagering merchandise in violation of the Tennessee Sports activities Gaming Act.
In a letter addressed to Polymarket, SWC Government Director Mary Beth Thomas wrote that the corporate’s sports activities occasion contracts fail to fulfill state shopper safety requirements and pose “an instantaneous and vital menace to the general public curiosity of Tennessee.”
Practically an identical language appeared within the letters despatched to Kalshi and Crypto.com’s North American Derivatives Change.
All three platforms are registered with the Commodity Futures Buying and selling Fee as designated contract markets, permitting them to listing event-based derivatives nationwide.
The businesses have argued that federal oversight preempts state playing legal guidelines, although courts have issued combined rulings on the place federal authority ends and state jurisdiction begins.
C&D to Polymarket: pic.twitter.com/OuinQf8AD4
— Daniel Wallach (@WALLACHLEGAL) January 9, 2026
The enforcement motion comes as exercise on prediction markets continues to increase.
Polymarket re-entered the US market final yr following its $112 million acquisition of derivatives trade and clearinghouse QCX and started opening its US app to waitlisted customers in December.
The Tennessee motion seems to be the primary publicly disclosed state-level cease-and-desist order particularly focusing on Polymarket, which presently affords solely sports-related contracts to US customers.
Tennessee’s letters define escalating penalties for noncompliance, together with civil fines of as much as $25,000 per violation.
Extra considerably, the regulator warned that continued violations may set off prison referrals. Underneath Tennessee legislation, playing promotion can carry misdemeanor or felony prices, relying on severity.
State Opposition to Prediction Markets Builds Over Client, Tax Issues
State opposition to prediction markets has been constructing for months.
In 2025, the SWC urged the CFTC to ban sports activities occasion contracts, arguing that such merchandise bypass state safeguards equivalent to age verification, accountable gaming guidelines and anti-money laundering necessities.
Tennessee officers have additionally warned that prediction markets threaten tax income generated by licensed sportsbooks.
The letters have been copied to Tennessee Legal professional Basic Jonathan Skrmetti, who has backed different states in authorized challenges in opposition to Kalshi.
As reported, a brand new laws to restrict the interactions between authorities officers and the prediction markets is being supported by greater than 30 Democrats within the US Home of Representatives, together with former Speaker Nancy Pelosi.
The lure behind new restrictions is a controversial Polymarket wager, which began as a wager of $32,000 however ultimately turned greater than $400,000 shortly earlier than the sudden detention of Venezuelan President Nicolás Maduro.
The invoice proposed by the New York Consultant Ritchie Torres is the Public Integrity in Monetary Prediction Markets Act of 2026.
The put up Tennessee Orders Kalshi, Polymarket, and Crypto.com to Halt Sports activities Betting Contracts appeared first on Cryptonews.