Tennessee Sends Cease-and-Desists to Kalshi, Polymarket, Crypto.com

Tennessee is joining the ongoing fight against the spread of prediction platforms, sending cease-and-desist orders to several of the industry’s most popular outlets.

The Tennessee Sports Wagering Council (SWC) issued the orders – dated Friday – to Kalshi, Polymarket, and Crypto.com, demanding they stop offering sports contracts in the state.

Key Takeaways

• The platforms were ordered to shut down their sports event contracts and refund customer deposits.
• The regulator threatened financial and legal punishments.
• Kalshi has led several legal rebuttals against states that sent cease-and-desists.

Tennessee’s gaming regulators sent the letters individually to Tarek Mansour, CEO of Kalshi; Kevin J. Dan, chief compliance officer and chief regulatory officer of Crypto.com; and to Polymarket.

All of the letters expressed the same sentiment, that the platforms were operating in violation of the state’s sports betting laws. “Interactive sports wagering” may only be offered by state-licensed operators.

BREAKING: Tennessee Sports Wagering Council sends cease-and-desist letters to Kalshi (📸), Polymarket and Crypto, demanding that they cease offering sports event contracts to TN customers immediately, void all pending contracts and issue refunds by Jan. 31. Lawsuits are imminent. pic.twitter.com/jDIPIwsrCn

— Daniel Wallach (@WALLACHLEGAL) January 9, 2026

“The sports events contracts offered on [the prediction platform’s] exchange are not compliant with these protections (and many others) and are an immediate and significant threat to the public interest of Tennessee,” the cease-and-desist reads. “Even if it did offer these protections, [the prediction platform] does not have the required license issued by the SWC and does not pay the privilege tax mandated by the state.”

The letter continued to “demand” that the prediction platforms shut down sports event contracts and void pending contracts immediately. 

Additionally, the regulator stated that the platforms were required to refund all deposits to individuals located in Tennessee by Jan. 31.

The SWC threatened to impose fines of $10,000 for the first offense, $15,000 for the second offense, and $25,000 for a third or subsequent offense, injunctive relief, and a referral to law enforcement if the platforms did not meet their demands.

Enjoying Covers content? Add us as a preferred source on your Google account

The brewing conflict

Prediction platforms remain at the heart of the most controversial corner of the gaming industry.

The ongoing feud between platforms and state regulators centers around a philosophical difference. 

To the platforms, sports event contracts are just like other trading options; customers consider a variety of outcomes and trade contracts associated with what they believe will happen in a peer-to-peer exchange. That distinguishes them from the person-versus-house setup of online sportsbooks and casinos.

Regulators do not believe the difference warrants escaping state regulation. States with legal sports betting require that operators receive licensing from their regulators, but federally regulated prediction platforms have not been held to that standard.

Prediction platforms have grown increasingly popular for several reasons. One of the biggest ones is that they are available on a wider basis and can service customers in states where sports betting hasn’t been legalized.

Another selling point is sportsbooks impose a vig, which is effectively a tax for wagering, on every bet. That’s why the “house always wins.”

Since prediction customers don’t bet against the house, winning contracts can produce higher payouts.

Take it to court

Just because Kalshi and others received the cease-and-desists doesn’t mean that they are going to fade into the night.

Kalshi already threw a counterpunch at one of the biggest gaming states in the country, New York, after its regulator sent it a cease-and-desist in October. Kalshi sought a temporary restraining order against the New York Gaming Commission, arguing that the effort to shut down a federally regulated exchange was “field-preempted and conflict-preempted.”

New York, Illinois, Massachusetts, New Jersey, Nevada, and other states already entered the legal fight against prediction platforms. However, Kalshi’s willingness to drag the cases to court suggests that this might not be the end of the battle in Tennessee.

Pages related to this topic