Tennessee’s Sports Wagering Council sent cease-and-desist letters on Jan. 9 to Kalshi, Polymarket and Crypto.com, directing the three platforms to stop offering sports-related prediction market products to Tennessee residents. The letters also called for any unsettled contracts to be voided and for customer funds to be returned. According to the council, those products fall under sports betting and must comply with state rules covering licensing, taxation, age limits and consumer protections. Kalshi disputed that view, saying its event contracts are financial instruments regulated by the U.S. Commodity Futures Trading Commission, or CFTC, rather than products subject to state sports wagering laws. The company said users trade contracts whose prices reflect implied market probabilities; when the event occurs, winning contracts settle at $1 and losing contracts settle at zero. The dispute centers on whether sports prediction markets should be governed through a unified federal framework or through state-by-state gambling licensing regimes, according to Bitcoin.com News.
Odaily reported that Tennessee’s Sports Wagering Council sent cease-and-desist letters on Jan. 9 to prediction market platforms Kalshi, Polymarket and Crypto.com, ordering them to stop offering sports-related prediction market products to residents of Tennessee. The regulator also asked the platforms to void unsettled contracts and return customer funds.
The council said the products amount to sports betting, meaning the platforms must comply with state requirements on licensing, taxation, age restrictions and consumer protection.
Dispute centers on who regulates sports prediction markets
Kalshi said its event contracts are financial instruments regulated by the U.S. Commodity Futures Trading Commission (CFTC) and are not subject to state sports betting laws. Under Kalshi’s description, users buy and sell contracts, and the contract price reflects the market’s implied probability. When the event occurs, winning contracts settle at $1, while losing contracts settle at zero.
That structure differs from traditional sportsbooks, which usually take customer bets directly and set odds to manage risk. On Kalshi, users trade against one another, while the platform matches orders and prices are formed by buyers and sellers.
The case raises a broader question: whether sports prediction markets should fall under a unified federal regulatory system or under separate state gambling licensing regimes. The report cited Bitcoin.com News as the source.
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