Tennessee’s sports betting regulator has ordered prediction market platforms Kalshi, Polymarket and Crypto.com to halt the offering of sports event contracts to residents of the state.
In cease-and-desist letters dated Friday, the Tennessee Sports Wagering Council (SWC) accused all three platforms of illegally offering sports wagering products without holding a license issued under the Tennessee Sports Gaming Act, according to copies of the letters published on X by sports betting attorney Daniel Wallach.
The SWC said the sports event contracts listed on Kalshi, Polymarket and Crypto.com’s North American Derivatives Exchange allow users to wager money on the outcome of sporting events, a practice Tennessee law reserves exclusively for licensed sportsbooks. The regulator argued that packaging the products as “event contracts” does not exempt them from state gambling statutes.
The regulator also pointed to consumer protection requirements imposed on licensed operators, including age restrictions, responsible gaming tools and anti-money laundering controls, which it says are absent from the platforms’ offerings.
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Tennessee orders prediction markets to issue refunds
The SWC ordered the companies to immediately stop offering sports-related contracts to Tennessee residents, void all existing contracts entered into by users in the state and refund all funds on deposit by Jan. 31, 2026.
Failure to comply could result in fines of up to $25,000 per offense, according to the letters. The regulator also warned that continued noncompliance could lead to injunctive relief and referrals to law enforcement for further investigation into illegal gambling operations.
While Kalshi and Polymarket operate under federal commodities law and have had dealings with the US Commodity Futures Trading Commission (CFTC), the SWC maintained that federal oversight does not override Tennessee’s authority to regulate sports wagering within its borders.
Cointelegraph reached out to Kalshi, Polymarket and Crypto.com for comment but had not received a response by publication.
Related: CFTC issues no-action letter to Bitnomial, clearing way for event contracts
Judge temporarily blocks Connecticut from enforcing order against Kalshi
Last month, a US federal judge temporarily barred Connecticut regulators from enforcing a cease-and-desist order against Kalshi, granting the company a short-term reprieve as the legal dispute moves forward. The order follows action by the Connecticut Department of Consumer Protection, which accused Kalshi, Robinhood and Crypto.com of offering unlicensed sports wagering through online event contracts.
Kalshi challenged the state’s move in court, arguing that its event contracts fall under federal commodities law and are regulated exclusively by the CFTC. Judge Vernon Oliver ruled that Connecticut must pause enforcement while the court considers Kalshi’s request for a preliminary injunction, setting deadlines for filings in January and scheduling oral arguments for mid-February.
The case adds to a growing legal fight between Kalshi and state regulators nationwide, as several states have questioned whether prediction market contracts tied to sports constitute illegal gambling. Kalshi has launched lawsuits against regulators in New York, Massachusetts, New Jersey, Nevada, Maryland and Ohio.
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