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Tennessee investigates Kalshi and Polymarket for alleged sports gambling violations, highlighting tensions with federal CFTC regulations.Tennessee investigates Kalshi and Polymarket for alleged sports gambling violations, highlighting tensions with federal CFTC regulations.

Tennessee Probes Kalshi, Polymarket Over Sports Gambling Concerns

Author: coinlineup

Source: coinlineup

2026/01/18 12:58

Tennessee Investigates Kalshi and Polymarket for Sports Gambling Violations

Key Points:

Main event, leadership changes, market impact, financial shifts, or expert insights.
Platforms face voided trades, refunds, and market shutdowns.
Cease-and-desist orders challenge federal CFTC oversight.

Tennessee’s probe targets Kalshi, Polymarket, and Crypto.com’s NADex platforms for alleged unlicensed sports gambling. Cease-and-desist letters demand halting sports-related contracts and customer refunds by January 31, with a TRO temporarily blocking enforcement against Kalshi.

The probe highlights tensions between state gambling laws and federal CFTC regulations, impacting both platform operations and user trades.

State-Federal Tensions Badly Affecting Operations

The Tennessee Sports Wagering Council targeted “sports gambling” activities offered by Kalshi and Polymarket. The council’s actions followed numerous similar state-led efforts challenging CFTC-regulated event contracts.

Kalshi and Polymarket received cease-and-desist notices, requiring contract voids and customer refunds by month-end. US District Judge Aleta Trauger issued a temporary restraining order favoring Kalshi, delaying Tennessee’s enforcement.

The investigation may deter future markets involving sports contracts, impacting market confidence. Mary Beth Thomas, Executive Director, emphasized consumer protections and compliance with state laws.

Legal battles may lead to increased regulatory scrutiny on prediction markets, altering platform strategies. Additional states may consider similar actions, potentially affecting national market dynamics.

Navigating Regulatory Chaos

Companies involved must navigate overlapping state and federal jurisdictions. Historical trends show frequent tensions between state gambling laws and federally authorized contracts, raising market stability concerns.

Long-term impacts could include changes in financial regulation, technological adaptations, or shifts in market participation. As platforms contest the state’s stance, potential regulatory frameworks remain in debate.

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