Tennessee regulators have ordered Kalshi, Polymarket, and Crypto.com to cease offering sports event contracts to residents in the state, alleging that the firms have violated state gambling laws by operating without the required licenses.
In cease-and-desist letters dated Jan. 9, the Tennessee Sports Wagering Council (SWC) accused all three firms of illegally offering sports wagering products under the guise of event contracts.
The companies currently operate under registration with the Commodity Futures Trading Commission (CFTC) as designated contract markets, offering users the ability to buy contracts based on the outcome of sports events.
But under Tennessee’s Sports Gaming Act, any entity that accepts wagers on sporting events must hold a state-issued license. The SWC says none of the three firms has one. “Accordingly, the sports events contracts offered … are Wagers under the Act and are being offered illegally in violation of Tennessee law and regulations,” the letters state.
The companies were given until Jan. 31 to shut down all Tennessee-based activity, void open contracts involving state residents, and refund all deposits.
Failure to comply could lead to civil penalties of up to $25,000 per violation and potential criminal referrals for aggravated gambling promotion, a felony under state law.
While these platforms operate legally under federal derivatives regulations, states have often pursued them. In December last year, Connecticut sent a trio of cease-and-desist orders to Robinhood, Kalshi and Crypto.com.
The platforms’ defenses revolved around being federally regulated by the CFTC. At the time, Jack Such, a Kalshi spokesperson, said their offerings are “very different from what state-regulated sportsbooks and casinos offer their customers.”
Kalshi, Polymarket and Crypto.com did not return CoinDesk’s requests for comment by publication time.