Tennessee Orders Kalshi, Polymarket, and Crypto.com to Halt Sports Betting Contracts

Tennessee’s regulator has ordered prediction market platforms Kalshi, Polymarket, and Crypto.com to cease providing sports-related contracts within the state.

In cease-and-desist letters filed on January 9, the Tennessee Sports Wagering Council (SWC) directed the three corporations to instantly halt sports activities occasion contracts supplied 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 Wagering

The regulator accused the platforms of working unlicensed sports activities wagering merchandise in violation of the Tennessee Sports Gaming Act.

In a letter addressed to Polymarket, SWC Executive Director Mary Beth Thomas wrote that the corporate’s sports activities occasion contracts fail to meet state shopper safety requirements and pose “a right away and vital risk to the general public curiosity of Tennessee.”

Nearly equivalent language appeared within the letters despatched to Kalshi and Crypto.com’s North American Derivatives Exchange.

All three platforms are registered with the Commodity Futures Trading Commission as designated contract markets, permitting them to record event-based derivatives nationwide.

The corporations have argued that federal oversight preempts state playing legal guidelines, although courts have issued blended 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 broaden.

Polymarket re-entered the US market last year following its $112 million acquisition of derivatives alternate 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 concentrating on Polymarket, which at present presents solely sports-related contracts to US customers.

Tennessee’s letters define escalating penalties for noncompliance, together with civil fines of up to $25,000 per violation.

More considerably, the regulator warned that continued violations might set off legal referrals. Under Tennessee legislation, playing promotion can carry misdemeanor or felony costs, relying on severity.

State Opposition to Prediction Markets Builds Over Consumer, Tax Concerns

State opposition to prediction markets has been constructing for months.

In 2025, the SWC urged the CFTC to prohibit sports activities occasion contracts, arguing that such merchandise bypass state safeguards similar 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 Attorney General Jonathan Skrmetti, who has backed different states in authorized challenges towards Kalshi.

As reported, a brand new laws to restrict the interactions between authorities officers and the prediction markets is being supported by more than 30 Democrats within the US House of Representatives, together with former Speaker Nancy Pelosi.

The lure behind new restrictions is a controversial Polymarket guess, which started as a guess of $32,000 however finally turned greater than $400,000 shortly earlier than the sudden detention of Venezuelan President Nicolás Maduro.

The invoice proposed by the New York Representative Ritchie Torres is the Public Integrity in Financial Prediction Markets Act of 2026.

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