Tennessee Chimes In On Sports Prediction Markets

Posted on: April 16, 2025, 06:10h. 

Last updated on: April 16, 2025, 06:10h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • State claims only its regulator can approve sports betting there
  • Doesn’t go as far as other states in quest to limit prediction markets

Tennessee is the latest state to voice opposition to prediction operators offering sports-linked event contracts with its gaming regulator telling the Commodities Futures Trading Commission (CFTC) it has sole authority over sports betting licensing in the state.

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Tennessee Sports Wagering Council (SWC) Executive Director Mary Beth Thomas. She wants the CFTC to halt prediction markets from operating in her state. (Image: X)

In a letter to CFTC Acting Director Caroline Pham, Tennessee Sports Wagering Council (SWC) Executive Director Mary Beth Thomas said sports wagering licenses in that state are considered “taxable privilege” and are issued “in accordance with the Tennessee Sports Gaming Act.”

We believe that these sports event contracts are Wagers under the Act and are being offered in violation of Tennessee law and regulations,” wrote Thomas.

She added that the sports event contracts offered by firms such as Crypto.com, Kalshi, and Robinhood Markets are essentially sports bets because buyers of those derivatives experience wins or losses based on the outcomes of sporting events.

Tennessee Not Yet Going as Far as Other States

For now, Tennessee isn’t joining Illinois, Montana, Nevada, New Jersey, and Ohio in issuing a cease-and-desist letter to Kalshi, but it’s clearly among the other states that are looking into the matter of prediction market operators offering sports event contracts. That group includes Connecticut, Massachusetts, and Michigan, among others.

Kalshi is prepared to tussle with the states and has made clear it will lean on its status as a federally regulated company in those legal challenges. As for Tennessee, the SWC may do well to not challenge Kalshi in court because last week a federal judge in Nevada granted the company an injunction against the Nevada Gaming Control Board (NGCB), meaning the prediction markets firm can continue doing business in that state.

In his ruling, US District Court Judge Anthony Gordon noted Kalshi was likely to be able to prove it is beholden to federal, not state regulators, adding that the NGCB was unlikely to effectively prove anything to the contrary.

There are similarities between Nevada’s gripes with Kalshi and those held by Tennessee. When the NGCB  issued its cease-and-desist letter last month, it made clear that any operator offering sports wagering in the state must be licensed by the Nevada Gaming Commission (NGC). In her letter to Pham, Thomas made a similar argument, noting sports betting in Tennessee without a permit issued by the SWC violates the state’s Sports Gaming Act.

Tennessee Has Other Concerns

Thomas also noted the Tennessee Sports Gaming Act prohibits sportsbook operators from allowing customers to fund accounts with credit cards or cryptocurrency — the latter of which is banned as a funding mechanism in all states that permit sports betting.

Kalshi announced last week that it will allow funding of accounts in USDC — a stablecoin linked to the US dollar — but the company doesn’t accept credit cards. Its other account funding options are bank deposits, debit cards, and wire transfers.

Thomas also expressed concern that CFTC-regulated firms are offering derivatives “on injuries, penalties, or the actions of individual collegiate athletes, and does not permit in-game proposition bets on collegiate teams”, all of which are prohibited by the SWC.