Prediction Markets And Regulators Spar In Tennessee
The Tennessee Sports Wagering Council (TSWC) has issued a cease-and-desist letter to prediction market operators Kalshi, Polymarket, and Crypto.com. But a Tennessee Judge has granted Kalshi a preliminary injunction in the matter. This marks the Volunteer State as yet another battleground for prediction markets in the nation.
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Tennessee vs Prediction Markets: State of the State
So, what exactly happened between the Tennessee regulator and prediction markets, and what do the state regulators' actions and the follow-up in the courts mean?
The TSWC sent cease-and-desist letters to Kalshi, Polymarket, and Crypto.com for operating sports betting platforms without a sports betting license. The TSWC argues that sports event contracts offered by these platforms are sports betting. Per the Tennessee Sports Gaming Act, all sports betting platforms operating in Tennessee must have a license.
Kalshi, as well as Polymarket and Crypto.com, hold a designated contract market license with the Commodity Futures Trading Commission (CFTC). A license they believe allows them to operate across the US without needing state licenses.
That belief is why Kalshi is challenging the TSWC in court by first requesting a preliminary injunction and restraining order against the TSWC, a request granted by Judge Aleta Trauger. The preliminary injunction allows Kalshi to continue offering its sports event contracts in Tennessee and bars the regulator from enforcing any penalties until the case between the operator and the state regulator is resolved.
Kalshi: Back To Winning Ways
The granting of a preliminary injunction is a big win for Kalshi. The platform has received the opposite ruling in both Maryland and Nevada.
In Maryland, Judge Andrew Abelson ruled that Kalshi didn't show the "likelihood of success on the merits of its claim."
In Nevada, Judge Andrew Gordon reversed their previous decision to grant Kalshi a preliminary injunction. Gordon stated that Kalshi's argument was "contrary to Congress's intent."
The decision by Judge Trauger shows there is still some legal merit to Kalshi's argument.
Prediction Market Battleground States
With this lawsuit in Tennessee, Kalshi and prediction market operators have opened a sixth battleground state. Along with lawsuits in Nevada and Maryland, the firm has similar suits in four other US states.
| States |
|---|
| California |
| Maryland |
| Massachusetts |
| Nevada |
| New Jersey |
| New York |
This list doesn't include a class action lawsuit, where users allege the platform is operating an illegal sports betting operation. The class action suit has plaintiffs from Arizona, California, Florida, New Mexico, New York, and Texas.
Kalshi, as well as other prediction market operators, have also received cease-and-desist letters from an additional four states where a lawsuit has yet to be filed. Those states are Arizona, Illinois, Montana, and Ohio.
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