Tennessee regulators have ordered several crypto-linked platforms to stop offering sports event contracts to residents, marking a fresh state-level push against prediction markets tied to sporting outcomes. The Tennessee Sports Wagering Council sent cease-and-desist letters this week to Kalshi, Polymarket, and Crypto.com, according to regulatory notices and company statements. The council said the platforms must immediately halt activity related to sports contracts in the state, void existing positions, and refund customer funds tied to those contracts. The move places Tennessee among a growing number of states drawing a hard line between licensed sports betting and crypto-based event markets. Regulators classify contracts as sports wagering Tennessee officials said the products offered by the platforms function as sports wagers under state law. As a result, only operators licensed by the state may legally offer them. In the letters, the council argued that labeling the products as “event contracts” does not change their underlying structure. Customers place money on the outcome of professional and collegiate sporting events, which Tennessee law treats as regulated gambling. The council also warned that failure to comply could lead to enforcement actions. Those may include fines and further legal steps if the platforms continue operating in the state. Platforms face mounting state pressure The Tennessee action follows similar scrutiny in other U.S. jurisdictions. State regulators have increasingly challenged platforms that allow users to trade contracts tied to sports results, even when those platforms operate nationally or claim federal oversight. Kalshi has previously argued that some of its contracts fall under federal commodities regulation rather than state gambling laws. However, state authorities have maintained that sports-related markets still require local licensing when offered to residents. Crypto.com and Polymarket have also adjusted their offerings in past cases, restricting or withdrawing sports products in certain states after regulatory warnings. Broader implications for prediction markets The dispute highlights a widening regulatory gap between traditional sports betting frameworks and emerging crypto-based markets. While licensed sportsbooks operate under strict state rules, prediction platforms often rely on different legal interpretations. For states like Tennessee , the priority remains consumer protection and enforcement of existing wagering laws. Officials have stressed that unlicensed operators pose risks tied to oversight, dispute resolution, and responsible gambling standards. As regulators continue to review these products, platforms may face increasing pressure to either seek state licenses, limit geographic access, or redesign contracts that touch on sports outcomes. The Tennessee order adds momentum to that trend and signals that state regulators intend to assert jurisdiction, even as federal debates around prediction markets continue.
