Tennessee Gambling Laws Force Prediction Market Platforms to Cease Operations for State Residents

Regulatory enforcement in Tennessee has escalated, with state authorities taking decisive action against major prediction market operators. Kalshi, Polymarket, and one exchange have all received mandates to halt the provision of sports event contracts to Tennessee residents, marking a significant clash between emerging crypto derivatives and traditional state gambling regulations.

The core issue centers on Tennessee gambling laws and licensing requirements. Under the state’s Sports Gaming Act, any platform facilitating wagers on sports outcomes must obtain explicit authorization from Tennessee’s government. The three platforms in question—which maintain registrations as designated contract markets with the U.S. Commodity Futures Trading Commission (CFTC)—had operated without securing these mandatory state licenses.

These prediction market platforms allow traders to speculate on sports event outcomes through contract purchases, a mechanism that regulators argue falls squarely under the definition of sports wagering. Federal CFTC registration provides no exemption from state-level gambling statutes, a distinction that now has real consequences for platform operators.

The enforcement action underscores an emerging tension: while the CFTC has created a regulatory pathway for certain derivatives products at the federal level, individual states maintain substantial autonomy in defining and restricting gambling activities within their borders. Tennessee’s regulatory posture signals that prediction markets—regardless of their crypto-native architecture or federal oversight—cannot bypass traditional gaming licensing frameworks.

For residents of Tennessee, the practical outcome is immediate: access to these platforms for sports event speculation is effectively blocked. For the platforms themselves, this represents either a necessity to obtain Tennessee licenses or an acceptance of revenue loss from the state’s market.