Tennessee Tells CFTC to Block Sports Prediction Markets

Tennessee has officially weighed in on the debate over sports prediction markets, urging the Commodity Futures Trading Commission (CFTC) to rethink its stance. The Tennessee Sports Wagering Council, which oversees legal betting in the state, sent a letter to the federal agency arguing that sports event contracts being offered in the state amount to illegal gambling.

Good to Know

• Tennessee opposes federally regulated sports prediction markets in its state.
• The state joins others like New Jersey and Ohio in raising concerns.
• Issues include college sports betting, crypto deposits, and lack of consumer safeguards.

According to the council, these contracts violate the Tennessee Sports Gaming Act by sidestepping state licensing rules and consumer protection standards. “We believe that these sports event contracts are Wagers under the Tennessee Sports Gaming Act and are being offered in violation of Tennessee law and regulations,” the letter stated.

The move adds Tennessee to a growing list of states challenging federally regulated prediction markets. Illinois, Michigan, Ohio, Maryland, and a few others have already issued cease-and-desist orders to operators offering such contracts without state approval.

While Tennessee hasn’t gone that far, it made clear that it wants the CFTC to stop allowing these contracts to be offered in the state. “We ask that you respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts,” the council added.

Prediction markets work by allowing users to buy and sell contracts based on future sports outcomes. Although CFTC oversight allows these markets to operate in all 50 states, legal sports betting is allowed in only 39. State regulators argue that prediction markets dodge taxes and lack proper oversight.

The letter from Tennessee pointed to several concerns. Some platforms offer bets on injuries, penalties, or college athlete performances—categories not allowed by licensed sportsbooks. Others take crypto and credit card deposits while skipping basic protections like self-exclusion options or anti-money laundering tools.

The prediction markets are not sitting still and fight back. After being told to stop operations in certain states, Kalshi responded by challenging the legal basis of those demands, arguing that federal regulation should override state gambling laws.