Tennessee regulators have moved to shut down sports-related prediction markets operating in the state, ordering Kalshi, Polymarket and Crypto.com to stop offering contracts tied to sporting events to local users.
State officials argue that these products amount to unlicensed sports betting and fall squarely under Tennessee’s gambling laws, regardless of how the platforms label them.
Key takeaways:
Tennessee has ordered Kalshi, Polymarket and Crypto.com to halt sports-related prediction contracts.
Regulators say “event contracts” are functionally the same as sports betting under state law.
Platforms must void existing Tennessee contracts and issue refunds by Jan. 31, 2026.
The move adds to a growing state-by-state clash over prediction markets and federal oversight.
According to cease-and-desist letters issued on Friday by the Tennessee Sports Wagering Council, all three platforms were offering wagering products without the required license under the Tennessee Sports Gaming Act. Copies of the letters were shared publicly by sports betting attorney Daniel Wallach.
The regulator said that the sports event contracts available on Kalshi, Polymarket and Crypto.com’s North American Derivatives Exchange allow users to stake money on the outcome of sporting events, an activity Tennessee law reserves exclusively for licensed sportsbooks. Simply calling the products “event contracts,” the council argued, does not remove them from the scope of state gambling statutes.
Beyond licensing, the SWC also raised consumer protection concerns. Licensed sportsbooks in Tennessee must comply with strict rules around age verification, responsible gambling tools and anti-money laundering safeguards. According to the regulator, those protections are either missing or insufficient on the prediction market platforms.
Refunds ordered as states push back on prediction markets
The cease-and-desist orders require the companies to immediately stop offering sports-related contracts to Tennessee residents, cancel all existing positions held by users in the state and refund any remaining balances by Jan. 31, 2026. Noncompliance could trigger fines of up to $25,000 per violation, with the regulator warning that further defiance could result in court injunctions or referrals to law enforcement.
While Kalshi and Polymarket operate under federal commodities rules and have engaged with the Commodity Futures Trading Commission, Tennessee officials made clear that federal oversight does not preempt the state’s authority over sports wagering. In their view, the contracts may resemble financial instruments, but their economic substance still constitutes gambling on sports outcomes within state borders.
The Tennessee action comes amid a broader national debate over how prediction markets should be regulated. Last month, a federal judge temporarily blocked Connecticut from enforcing a similar order against Kalshi, granting the company a pause while the court considers whether its products fall exclusively under federal jurisdiction. That case, which also involved allegations against Robinhood and Crypto.com, is still unfolding.
For now, Tennessee’s move underscores the growing tension between state gambling regulators and prediction market platforms. As these products blur the line between financial contracts and sports betting, more states are expected to test their authority, setting the stage for a legal showdown over who ultimately gets to decide where prediction markets can operate.
