The Tennessee Sports Wagering Council has sent cease-and-desist letters to Kalshi, Polymarket, and Crypto.com, demanding that the prediction market platforms stop offering sports event contracts to users in the state, cancel all pending contracts, and issue refunds by the end of January.

The letters were shared on X by sports betting and gaming lawyer Daniel Wallach, who also said “lawsuits are imminent.”

Each company operates as designated contract markets registered with the Commodity Futures Trading Commission (CFTC), but according to regulators, the state’s Sports Gaming Act requires the firms to hold state licenses, of which none of the companies have.

Technically, the companies are approved by federal regulators, but not by state authorities, leaving them in a sort of legal limbo. In the case of Tennessee, regulators have essentially classified the companies’ sports prediction markets as “illegal gambling.”

Said the letter to Kalshi:

Accordingly, the sports events contracts offered on Kalshi’s exchange are Wagers under the Act and are being offered illegally in violation of Tennessee law and regulations.

The regulator says that failure to comply with the demand will result in several fines and the referral to law enforcement for further investigation.

The letters come following broader scrutiny of prediction markets after highly suspicious bets on Venezuelan president Nicolás Maduro being removed from office were placed right on Polymarket before it happened.

Also read: Bitchat Sees Rapid Uptake in Iran During Nationwide Internet Blackout

One unknown entity was spotted turning $30,000 into $400,000 as the US invasion and subsequent regime change in Venezuela unfolded.

New York representative Ritchie Torres, along with 30 other members of congress, released the Public Integrity in Financial Prediction Markets Act of 2026 in response.

As stated by Torres’ announcement:

The bill prohibits federal elected officials, political appointees, Executive Branch employees, and congressional staff from buying, selling, or exchanging prediction market contracts tied to government policy, government action, or political outcomes when they possess material nonpublic information or could reasonably obtain such information through their official duties.

• Why did Tennessee issue cease-and-desist letters?
  Tennessee’s Sports Wagering Council says the prediction market contracts offered by Kalshi, Crypto.com and Polymarket are illegal “wagers” under state sports gambling law because the firms aren’t licensed to operate sportsbooks in the state.
  TechStory
• How does Tennessee classify these products?
  Regulators view sports-linked event contracts as unlicensed gambling, not just federally regulated financial products, and demand platforms stop offering them to Tennessee users.
  FinanceFeeds
• What must the companies do to comply?
  The companies have been ordered to halt new contracts, void existing ones, and refund Tennessee customers by Jan. 31 or face fines and enforcement actions.
  TechStory
• Why is there a legal dispute?
  The platforms argue they are regulated federally by the Commodity Futures Trading Commission as derivatives markets, but Tennessee insists state gambling laws still apply for sports-related betting contracts.

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