The Tennessee Sports Wagering Council has ordered prediction market operators Kalshi, Polymarket and Crypto.com to immediately stop offering sports event contracts in the state, declaring the contracts constitute illegal wagers under Tennessee law. The three companies must also issue full customer refunds by Jan. 31, 2026, or face fines starting at $10,000 per offense and potential referral to law enforcement.
The Tennessee Sports Wagering Council has issued cease-and-desist notices to Kalshi, Polymarket and Crypto.com, ordering all three prediction market operators to immediately stop offering sports event contracts in the state, Sports Betting Dime reported. The council also demanded that the companies issue full refunds of customer deposits and funds by no later than Jan. 31, 2026.
Mary Beth Thomas, executive director of the Tennessee Sports Wagering Council, wrote in all three notices that the contracts amount to illegal wagers under state law. “These sports event contracts give consumers the option to purchase contracts corresponding to one of two outcomes of an event,” Thomas wrote, as reported by Sports Betting Dime.
“The ultimate result is money being won or lost based on the outcome of a game. Accordingly, the sports events contracts offered on [the company’s] exchange are wagers under the act and are being offered illegally in violation of Tennessee law and regulations,” Thomas added.
Companies Lack Required Tennessee Licenses
All three companies are violating the Tennessee Sports Wagering Act by accepting money risked on the outcome of sporting events without a license issued by the sports wagering council, according to the notices. Tennessee law requires licensed entities to meet specific safeguards, including a minimum age of 21 to participate, anti-money laundering controls and responsible gaming protections.
None of the three companies offer these required safeguards to customers, according to the council. Additionally, none of the companies pay the state’s sports betting tax, Sports Betting Dime reported.
Fines and Law Enforcement Referral for Noncompliance
Failure to comply with the cease-and-desist demands carries escalating penalties: a $10,000 fine for a first offense, $15,000 for a second offense and $25,000 for a third and each subsequent offense.
Thomas also warned in each notice that noncompliance would trigger a referral to law enforcement for further investigation, according to Sports Betting Dime.
Daniel Wallach, a gaming law attorney, posted on social media platform X that lawsuits are likely imminent following the notices.
Tennessee Follows Connecticut’s Lead
Tennessee is not the first state to target prediction market operators over sports event contracts. Connecticut issued its own cease-and-desist notices to Kalshi, Robinhood and Crypto.com in early December, Sports Betting Dime reported.
The Connecticut Department of Consumer Protection Gaming Division said in its notices that the prediction market operators allow users to “purchase contracts based on their belief that a particular sport outcome will occur, such as a specific team winning a game, division, or championship.”
Kristofer Gilman, director of gaming for the Connecticut Department of Consumer Protection, wrote in the letters that the contracts “constitute sports wagering because they allow Connecticut residents to risk something of value for gain by an electronic wagering platform through the placement of wagers on the outcome of live sporting events or portions of a live sporting event including future events.”
Kalshi Has Fought Back in Other States
Sports Betting Dime reported that the prediction market operators — Kalshi in particular — have challenged cease-and-desist orders in court rather than withdrawing from states. Kalshi filed a lawsuit against the Connecticut Department of Consumer Protection just one day after receiving that state’s notices. The company followed a similar path in New York, filing a lawsuit against the New York State Gaming Commission in late October after receiving a cease-and-desist there.
