Polymarket and Kalshi Receive Cease-and-Desist Orders in Tennessee

Tennessee orders Polymarket, Kalshi, and Crypto.com to halt sports prediction markets, signaling tighter U.S. regulatory scrutiny.

Polymarket and Kalshi, two crypto prediction platforms, have been hit with cease and desist orders from the Tennessee Sports Wagering Council.

This action is part of a growing regulatory crackdown on prediction markets, with the platforms now being asked to stop offering sports betting contracts to Tennessee residents.

Accordingly, the Tennessee regulator has set a January 31 deadline for compliance; otherwise, it has warned of further legal action.

Tennessee’s Cease-and-Desist Orders Against Crypto Platforms

The Tennessee Sports Wagering Council issued cease-and-desist letters to Polymarket, Kalshi, and Crypto.com, demanding the firms stop offering sports betting contracts.

These platforms must void all current contracts and issue refunds to users by January 31.

The council has made it clear that failure to comply will result in a referral to law enforcement for further investigation.

This action highlights the ongoing tension between prediction markets and traditional sports betting regulations.

The rise of crypto-based platforms like Polymarket and Kalshi has raised questions about whether they should be classified as betting entities.

These platforms offer users the ability to wager on various events, from sports outcomes to political events, blurring the lines between traditional gambling and market prediction.

Regulatory Scrutiny of Prediction Markets Grows

The action in Tennessee is not an isolated case. Kalshi and Crypto.com received similar cease-and-desist orders from Connecticut’s Department of Consumer Protection (DCP) in December 2025.

Kalshi has since filed a motion for a preliminary injunction, seeking to reverse Connecticut’s order.

However, the state has opposed this motion, arguing that Kalshi cannot demonstrate harm from ceasing its “unlawful conduct.”

The increased regulatory scrutiny follows concerns about the legitimacy and transparency of prediction markets.

A major issue arose when a Polymarket trader made $400,000 by betting on the ousting of Venezuela’s former President Nicolás Maduro just before his arrest.

This prompted allegations of insider trading due to the timing of the bet, drawing the attention of lawmakers.

Related Reading: Polymarket Bets Spark Insider Trading Fears Before Maduro Capture

Concerns About Market Integrity and Insider Trading

The controversy surrounding Polymarket’s Maduro bet has led to heightened scrutiny of crypto prediction platforms.

Congressman Ritchie Torres introduced the ‘Public Integrity in Financial Prediction Markets Act’ to prevent political insiders from participating in such markets.

The act aims to restrict political figures from betting on events where they may have insider knowledge, aiming to protect the integrity of financial prediction markets.

Additionally, Congresswoman Dina Titus has raised concerns about Polymarket’s ability to comply with the Commodity Futures Trading Commission’s (CFTC) regulations.

She has called for the platform to provide answers regarding its safeguards against insider trading.

The scrutiny on these platforms is growing, and regulators are pushing for clearer rules to ensure market fairness and transparency.

The actions in Tennessee and Connecticut underscore the increasing regulatory pressure on crypto platforms offering prediction markets.

As lawmakers and regulators continue to examine these platforms, the future of prediction markets may see significant changes.

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