Tennessee regulators have ordered Kalshi, Polymarket and Crypto.com to stop offering sporting event contracts to state residents, alleging the companies violated the state’s gambling laws by operating without required licenses.
In cease and desist letters dated Jan. 9, the Tennessee Sports Wagering Council (SWC) accused the three companies of illegally offering sports betting products under the guise of event contracts.
The companies currently operate under registration with the Commodity Futures Trading Commission (CFTC) as designated contract marketplaces, providing users with the ability to purchase contracts based on the results of sporting events.
But under Tennessee’s sports gaming law, any entity that accepts wages at sporting events must have a state-issued license. The SWC says none of the three companies have any. “Accordingly, the proposed sporting event contracts…are wagering under the law and are being offered illegally in violation of Tennessee laws and regulations,” the letters state.
Companies had until Jan. 31 to cease all Tennessee-based operations, cancel open contracts involving state residents and refund all deposits.
Failure to comply could result in civil penalties of up to $25,000 per violation and possible criminal prosecution for promoting aggravated gambling, a felony under state law.
Although these platforms operate legally under federal derivatives regulations, states have often sued them. In December of last year, Connecticut sent three cease and desist orders to Robinhood, Kalshi and Crypto.com.
The platforms’ defenses revolved around their federal regulation by the CFTC. At the time, Kalshi spokesperson Jack Such said their offerings were “very different from what state-regulated sportsbooks and casinos offer their customers.”
Kalshi, Polymarket and Crypto.com did not respond to CoinDesk’s requests for comment at the time of publication.
