Tennessee sports betting regulators are urging the federal government to shut down sports prediction markets, joining a growing list of states fighting trading platforms that resemble unlicensed sportsbooks.
In a letter sent Monday to the Commodity Futures Trading Commission (CFTC), the Tennessee Sports Wagering Council (SWC) said that sports event contracts offered by Kalshi, Robinhood and other entities are in violation of state law and sidestep key consumer protections required of licensed TN sports betting operators.
“We believe that these sports event contracts are Wagers under the Act and are being offered in violation of Tennessee law and regulations,” SWC Executive Director Mary Beth Thomas wrote. “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.”
Tennessee sports betting concerns
Tennessee requires sportsbook operators to be licensed in order to offer wagers on sporting events, and its laws prohibit the use of credit cards, cryptocurrency funding, and in-game college proposition bets.
The state also mandates responsible gambling tools and age verification, which the SWC said are not enforced on federally regulated prediction platforms.
Kalshi, which is regulated by the CFTC, handled over $500 million on March Madness this year, matching roughly 16% of the total legal betting volume projected by the American Gaming Association. The company first partnered with Robinhood to offer sports markets nationwide ahead of the Super Bowl, though it paused the initial offering at the CFTC’s request.
CFTC yet to weigh in
The CFTC has not yet issued a clear position on whether sports prediction markets fall under its purview or if they violate state gambling laws. A roundtable meant to address the issue was scheduled for March but has yet to take place. The agency has called the session a “first step” toward resolving questions of jurisdiction and legality.
“As the Commission reviews these sports events contracts, we ask that you respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts.”
9 states take action
On Friday Michigan launched a formal investigation into sports prediction markets, marking the ninth state to join the fight.
Massachusetts officials have also launched a probe into Robinhood’s March Madness prediction markets. Secretary of the Commonwealth Bill Galvin issued a subpoena to the company on March 20 while state regulators review whether the product violates Massachusetts gambling laws.
Meanwhile, six states have issued cease-and-desist letters:
- Illinois
- Maryland
- Montana
- Nevada
- New Jersey
- Ohio
Despite the mounting scrutiny, Kalshi CEO Tarek Mansour recently said the company is “not necessarily very concerned” about the enforcement actions. Kalshi continues to operate in Nevada under a preliminary injunction as it challenges the state’s ban in federal court.
