Tennessee clamps down on unlicensed sports betting platforms

The Tennessee Sports Wagering Council (SWC) has issued cease-and-desist orders to three platforms - Kalshi, Crypto.com, and Polymarket - accusing them of violating the state's gambling laws. The council alleges that these platforms offered sports-related contracts without the necessary authorization.

The SWC, which oversees the regulation and licensing of online sports betting and fantasy sports in Tennessee, contends that the actions of these platforms meet the state’s definition of sports wagering. According to the regulator, sports-wagering activities - whether described as prediction markets or derivatives - require state licensing and adherence to consumer-protection and tax requirements, which the platforms are accused of lacking.

Demands for Immediate Compliance

In its formal demands, the SWC directed Kalshi, Crypto.com, and Polymarket to immediately halt the offering of sports-related contracts to Tennessee residents. Additionally, the platforms were instructed to cancel all existing contracts and issue refunds to users by January 31. The council warned that failure to comply with these directives could result in escalating fines and potential legal action.

The orders were first publicized by sports betting attorney Daniel Wallach on X.

Platforms Under Scrutiny

Kalshi and Polymarket are federally regulated prediction market platforms operating under the oversight of the Commodity Futures Trading Commission (CFTC). These platforms allow users to trade contracts tied to a wide range of real-world outcomes. Meanwhile, Crypto.com, primarily recognized as a cryptocurrency exchange, also provides prediction market features, which have drawn the attention of Tennessee regulators.

Legal Definition at the Core

The SWC’s stance hinges on its interpretation of the state’s gambling laws, which classify risking money on the outcomes of sporting events as sports wagering. By this definition, the platforms’ offerings fall under the jurisdiction of Tennessee’s regulatory framework for sports betting.

With the January 31 compliance deadline looming, the platforms face increasing pressure to either adjust their operations to meet state requirements or discontinue their offerings to Tennessee residents.

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