Tennessee this week became the latest U.S. state to request the cessation of sports prediction markets currently being offered by trading platforms.
As reported by our partners at Legal Sports Report (LSR), the Tennessee Sports Wagering Council (SWC) sent a letter to the U.S. Commodity Futures Trading Commission (CFTC) claiming that sports event contracts offered by Kalshi, Robinhood and other trading platforms are operating in violation of Tennessee sports betting laws and regulations.
Tennessee SWC: Trading platforms skirting sports wagering consumer protections
While other states are investigating or have sent cease-and-desist letters to the trading platforms themselves, the Tennessee SWC letter directly appealed to the CFTC to shut down the sports prediction markets.
“We believe that these sports event contracts are Wagers under the Act and are being offered in violation of Tennessee law and regulations,” SWC executive director Mary Beth Thomas wrote in the letter. “The sports event contracts give consumers the option to purchase contracts corresponding to one of two outcomes of an event. In a sporting event context, a consumer is purchasing a contract that reflects which team they believe will win or lose the matchup. The ultimate result is money being won or lost based on the outcome of a game.”
The SWC cited Tennessee’s sportsbook licensing guidelines and regulations which prohibit the use of credit cards, cryptocurrency funding and in-game college proposition wagers.
Volunteer State sports betting regulations also extend consumer protections such as responsible gambling tools and age verification, which the trading platforms are not following, the SWC argued.
Ball in the CTFC’s court
Kalshi is regulated by the CFTC while Robinhood is regulated by the U.S. Securities and Exchange Commission.
The two trading platforms attempted to feature Super Bowl prediction markets in February via a partnership, but those offerings were halted at the CFTC’s request.
Kalshi then switched its focus to NCAA Men’s and Women’s Basketball Tournament prediction markets in March and April, and wound up handling more than $500 million in prediction contracts, according to LSR.
Since its Super Bowl market ruling, the CFTC has yet to take a definitive stance on sports prediction markets and whether they violate state sports wagering laws.
A CFTC-led roundtable had tentatively been scheduled in March, but those plans fell through and the gathering has yet to take place.
In the meantime, the SWC letter also appealed to the trading platforms themselves:
“As the (CFTC) reviews these sports events contracts, we ask that you respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts.”
Tennessee one of 9 states taking measures
As reported by LSR, Massachusetts and Michigan are investigating sports prediction markets while the states of Illinois, Maryland, Montana, Nevada, New Jersey and Ohio have issued direct cease-and-desist letters.
In addition, Global Gaming Business Magazine reported recently that “more than 10 tribal gaming groups” from states with exclusive tribal gaming have sent letters to the CFTC as well, “voicing their concern that sports event contracts violate tribal gaming agreements.”
All are waiting, though, for the CFTC and/or Congress to weigh in on the matter.
That includes a U.S. District Court, which recently sided with Kalshi in its fight against Nevada’s cease-and-desist order. The court granted the trading platform’s motion for an injunction against Nevada, LSR reported, and is permitting it to continue offering sports event contracts in the state.
