Tennessee’s sports activities betting regulator has ordered Polymarket, Kalshi, and Crypto.com to cease providing sports activities betting contracts, bringing focus to the regulatory panorama of occasion contract exchanges. The company accused the three main prediction market platforms of violating state playing legal guidelines by working in Tennessee with out the required licenses.
Polymarket, Others Threatened With Fines For Providing Sports activities Occasion Contracts
On Friday, January 9, the Tennessee Sports activities Wagering Council (SWC) issued cease-and-desist letters to Polymarket, Kalshi, and Crypto.com’s Derivatives Trade. Within the letters, the state regulator requested all three prediction market companies to cease providing sports activities occasion contracts to the residents of Tennessee.
The state’s SWC additionally demanded that the three companies void all pending contracts entered into by Tennessee residents, and refund all buyer deposits by January 31, 2026.
SWC Govt Director, Mary Beth Thomas, wrote within the letter to Polymarket:
The sports activities occasions contracts supplied on Polymarket’s trade should not compliant with these [Tennessee state consumer] protections (and plenty of others) and are an instantaneous and vital risk to the general public curiosity of Tennessee.
The language within the Tennessee Sports activities Wagering Council letters to Kalshi and Crypto.com was fairly just like Polymarket’s cease-and-desist letter. This comes regardless of all three platforms being registered as designated contract markets with the Commodity Futures Buying and selling Fee (CFTC), permitting them to supply event-based derivatives contracts nationwide.
Supply: @WALLACHLEGAL on XRegardless of this CFTC designation, these prediction market companies have had regulatory run-ins with totally different states within the US. In December 2025, the state of Connecticut despatched a trio of cease-and-desist orders to Robinhood, Kalshi, and Crypto.com. The companies based mostly their protection on the time on receiving the CFTC’s approval to function in the USA.
This Tennessee cease-and-desist order appears to be the primary state-level regulatory difficulty confronted by Polymarket, which at the moment solely affords sports activities occasion contracts in the USA. Within the letters, the Tennessee Sports activities Wagering Council threatened a spread of penalties for any of the companies’ failure to conform.
One of many letters additional learn:
Failure to adjust to the SWC’s demand will consequence within the imposition of fines pursuant to the Act, which states that the SWC shall impose a high-quality in opposition to any particular person providing wagers in Tennessee and not using a license within the quantity of $10,000 for the primary offense; $15,000 for a second offense; and $25,000 for a 3rd or subsequent offense. Furthermore, failure to adjust to the SWC’s demand will consequence within the SWC searching for injunctive aid.
Prediction Markets Dealing with Elevated Regulatory Scrutiny
The prediction markets, which gained prominence in the course of the 2024 US elections, have continued to take pleasure in curiosity from customers and institutional traders. Nevertheless, the regulatory scrutiny confronted by the business has seen an analogous surge currently.
As an example, a Polymarket dealer reportedly netted document positive factors of over $400,000 from predicting the latest US army motion in Venezuela, prompting talks of introducing a invoice to stop insider buying and selling. As Bitcoinist reported, Rep. Ritchie Torres (DN.Y.) plans to introduce a invoice that may ban all government-affiliated people from taking part in state-related occasions within the prediction market.
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