Tennessee Gambling Regulator Says Kalshi, Crypto.com 'In Violation' Of State Law
The agency that regulates sports betting in Tennessee has told the Commodity Futures Trading Commission that it believes sports event trading via prediction markets is illegal in the state.
The Tennessee Sports Wagering Council recently penned a letter to the CFTC in advance of a planned roundtable on the future of prediction markets. It’s the only state-level regulator to have done so. Regulators in at least six other states have sent cease-and-desist letters to entities offering sports event trading, including Kalshi, Robinhood and Crypto.com.
The TSWC did not say it sent a cease-and-desist letter but did urge the CFTC to “not permit the offering of sports events contracts.”
Here’s some of the letter:
The Tennessee Sports Wagering Council (SWC) is the regulator of sports wagering in the State of Tennessee and is responsible for enforcing and supervising compliance with the laws and rules relating to wagering on sporting events in this state1. In Tennessee, it is a taxable privilege to offer sports wagering pursuant to a license issued in accordance with the Tennessee Sports Gaming Act (the Act)2.
We are writing to express our concerns with the sports event contracts currently being offered in Tennessee by Commodity Futures Trading Commission (CFTC) regulated entities. We believe that these sports event contracts are Wagers under the Act and are being offered in violation of Tennessee law and regulations. The sports event contracts give consumers the option to purchase contracts corresponding to one of two outcomes of an event. In a sporting event context, a consumer is purchasing a contract that reflects which team they believe will win or lose the matchup. The ultimate result is money being won or lost based on the outcome of a game. …
Additionally, the Tennessee Legislature has put in place many requirements of its sports betting Licensees in order to protect those who choose to wager in our state. Among other protections, individuals under the age of twenty-one are not permitted to wager in Tennessee.
You can see the full letter in the PDF below:
The six states known to have sent cease-and-desist letters to Kalshi et al are:
Nevada
New Jersey
Ohio
Illinois
Maryland
Montana
You can see the current status of all these cease-and-desist letters as of Friday in this post at The Event Horizon.
The National Tribal Gaming Commissioners & Regulators also recently sent a letter asking the CFTC to put a stop to sports event contracts. You can see that letter below.
In light of these critical concerns, the NTGCR strongly urges the Commodity Futures Trading Commission to recognize that Kalshi's sports event contracts, regardless of their labeling, constitute gaming, specifically sports betting, and are in clear contravention of established federal and state laws and public policy. We respectfully request that the CFTC take decisive action to address this circumvention by clarifying that such contracts fall under the prohibition of event contracts involving gaming as outlined in the Commodity Exchange Act and its implementing regulations.