Tennessee regulators have taken decisive action against Kalshi, Polymarket, and Crypto.com, instructing the three companies to cease offering contracts related to sports events to state residents. In a set of cease-and-desist letters issued on January 9, the Tennessee Sports Wagering Council (SWC) accused the firms of violating state gambling laws by operating without the necessary licenses.
The SWC’s allegations highlight that the companies have been promoting sports wagering products under the label of event contracts. While these firms function under registration with the Commodity Futures Trading Commission (CFTC) as designated contract markets, allowing users to purchase contracts based on the outcomes of sporting events, they are still required to comply with state laws. According to Tennessee’s Sports Gaming Act, any entity that accepts wagers on sports events must possess a state-issued license, which the SWC claims none of the three companies has obtained.
The cease-and-desist letters explicitly state that the contracts offered by these firms qualify as wagers under the Tennessee law and that they are being presented illegally. The companies have been given until January 31 to cease all operations in Tennessee, invalidate any open contracts with state residents, and refund all associated deposits.
Should the firms fail to comply with these directives, the consequences could include civil penalties of up to $25,000 for each violation, as well as potential criminal referrals for aggravated gambling promotion, a felony under Tennessee regulations.
While these platforms maintain that they operate legally within the framework of federal derivatives regulations, various states have consistently sought to enforce their own laws. For instance, in December, Connecticut issued cease-and-desist orders to Robinhood, Kalshi, and Crypto.com for similar reasons.
The companies have previously defended their operations by emphasizing their compliance with CFTC regulations. A spokesperson from Kalshi characterized their offerings as distinct from those provided by state-regulated sportsbooks and casinos. However, as of the time of publication, neither Kalshi, Polymarket, nor Crypto.com had responded to requests for comments on the matter.
