Tennessee Bans Unlicensed Prediction Bets: A State Showdown

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In the late-day hush that sits on the hills like dust in a sunbeam, Tennessee looked out at the glow of screens and the quiet chatter of numbers and bets. The names Kalshi, Polymarket, Crypto.com flickered there as if they were lanterns in a dark road, promising futures with a click and a grin. The state, old and weary, lifted its voice and told them to stop pretending the future could be bought without paying a price. The game, in its own language, was still gambling, and the players were not fooled by a label.

Highlights:

  • Tennessee orders Kalshi, Polymarket, and Crypto.com to halt sports-related prediction contracts.
  • Regulators insist that “event contracts” are just another name for sports betting under state law.
  • Platforms must void existing Tennessee contracts and issue refunds by Jan. 31, 2026.
  • The move adds to a growing clash between states over prediction markets and federal oversight.

Cease-and-desist letters, issued on a Friday by the Tennessee Sports Wagering Council, landed on the desks of the platforms with the dryness of old paper and the weight of a county rumor. Copies, shared by sports betting attorney Daniel Wallach, moved through the rooms like a cautious wind, reminding everyone that the law travels even when it wears a different hat.

The regulator said that the sports event contracts offered on Kalshi, Polymarket, and Crypto.com’s North American Derivatives Exchange allowed people to stake money on the outcomes of games. In Tennessee’s eyes, such wagers belong under the big roof of licensed sportsbooks, no matter what you call them. A contract, a bet, a fancy label-the heart of the matter is the same: gambling on sports within these borders.

Beyond licensing, the SWC raised concerns for those who walk into the light with a credit card and a dream. Licensed sportsbooks must verify age, offer tools for responsible gambling, and guard against money laundering. The platforms, regulators say, fall short of these protections, leaving bettors with more questions than safeguards.

Refunds ordered as states push back on prediction markets

The cease-and-desist orders demand that the platforms immediately stop offering sports-related contracts to Tennessee residents, cancel all existing positions, and refund any remaining balances by Jan. 31, 2026. Noncompliance could bring fines up to $25,000 per violation, and persistent defiance might invite court injunctions or a summons to law enforcement, as if the state had a stubborn dog that won’t stop barking.

While Kalshi and Polymarket operate under federal commodities rules and have engaged with the Commodity Futures Trading Commission, Tennessee makes clear that federal oversight does not erase the state’s right to govern sports wagering. The contracts may wear the mask of financial instruments, but their substance, in this country, remains gambling on sports outcomes within these borders.

The Tennessee action sits within a broader national debate about how prediction markets should be regulated. Last month, a federal judge temporarily blocked Connecticut from enforcing a similar order against Kalshi, granting a pause while the court weighs whether the products fall exclusively under federal jurisdiction. That case, which also involved Robinhood and Crypto.com, moves slowly, like a wagon through a long drought.

For now, Tennessee’s move sharpens the tension between state gambling regulators and prediction-market platforms. As these products blur the lines between contracts and bets, more states are likely to test their power, setting the stage for a legal showdown over who gets to decide where prediction markets can operate. 😅🤷‍♂️

Disclaimer: This is not financial advice. Do your own research, and talk to a licensed advisor before making decisions. And yes, the world keeps turning, even when contracts don’t.

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2026-01-12 03:07