Catenaa, Friday, January 16, 2026- Tennessee’s Sports Wagering Council has issued cease-and-desist letters to Polymarket, Kalshi, and Crypto.com’s North American Derivatives Exchange, demanding the platforms halt sports event contracts for state residents and refund customer deposits by January 31.
The letters, dated January 9, cite non-compliance with Tennessee consumer protections, including age restrictions, responsible gaming rules, and anti-money laundering requirements.
Violations could trigger fines up to $25,000 and potential criminal charges under the state’s gambling statutes. The letters mark the first publicly disclosed state-level enforcement action against Polymarket since its U.S. relaunch in December following its $112 million acquisition of QCX.
All three exchanges are registered with the Commodity Futures Trading Commission as designated contract markets, a federal designation they argue preempts state gambling regulations.
Kalshi has filed a federal lawsuit to block Tennessee’s action, calling the state’s move unlawful and emphasizing its nationwide regulatory oversight. Polymarket and Crypto.com have not responded to requests for comment.
The SWC had previously warned the CFTC and state officials that prediction markets could threaten state-regulated sportsbooks and tax revenue.
Tennessee Attorney General Jonathan Skrmetti, involved in prior lawsuits against Kalshi, received copies of the letters. Legal experts anticipate federal court challenges from the affected platforms, continuing the tension between state gambling authorities and federally regulated prediction market exchanges.
