The Tennessee Sports Wagering Council (SWC) moved on January 9, 2026, issuing cease-and-desist orders that tell Kalshi, Polymarket, and Crypto.com to stop offering sports-event contracts to Tennessee residents. Tennessee is treating these contracts as unlicensed sports wagering with immediate consumer-protection and tax implications.
The SWC anchored its position in the Tennessee Sports Gaming Act of 2019, asserting that accepting money tied to sporting outcomes requires a state license. The council also flagged gaps it associates with regulated wagering—21+ age gating, AML controls, eligibility checks, and responsible-gaming features like self-exclusion and limits—while noting some platforms allow participation starting at 18.
What Tennessee ordered
SWC Executive Director Mary Beth Thomas framed the posture as a public-interest issue, stating the contracts are “not compliant with these protections and [an] immediate and significant threat to the public interest of Tennessee.” The quote captures the regulator’s core thesis: the products look like sports betting, but without the state’s compliance perimeter.
The orders set out direct operational requirements for the platforms inside Tennessee. They instruct operators to stop offering sports-event contracts in the state and to void existing sports-related contracts for Tennessee residents.
The council also attached a customer-remediation timeline. Platforms were directed to return customer balances by January 31, 2026, creating a defined window for unwind, reconciliation, and refunds.
Enforcement risk escalates quickly if the SWC treats noncompliance as ongoing violations. The civil fine schedule starts at $10,000 for a first offense, rises to $15,000 for a second, and reaches $25,000 for subsequent violations, with the added threat of criminal referrals (including a Class B misdemeanor for illegal gambling and potential Class E felony exposure for aggravated gambling promotion).
The Tennessee action sits within a broader patchwork of state-by-state moves against sports-event contracts. Jurisdictions cited alongside Tennessee include Connecticut, Arizona, Ohio, Louisiana, Nevada, Maryland, Massachusetts, New York, and Illinois—evidence of a fragmented regulatory landscape that complicates national distribution.
Platforms are contesting state authority by pointing to federal oversight and CFTC-linked preemption arguments, and the litigation track is already active. Kalshi has filed in federal court challenging Tennessee’s order, while related disputes have produced mixed outcomes: Maryland judges denied injunctive relief, Nevada has required state gaming compliance, New Jersey saw an initial finding favoring CFTC jurisdiction that is now on appeal, and Connecticut has paused enforcement pending litigation.
Operational impact and what to watch
For traders, managers, and platform operators, the immediate risk is operational disruption across specific geographies rather than a uniform nationwide shutdown. State enforcement can force rapid product takedowns, contract voiding, and customer remediation, compressing timelines for risk, legal, and support teams.
Near-term attention now centers on deadlines and court decisions that could reshape go-to-market strategy. The January 31 refund date, any injunction activity, and the presence—or absence—of criminal referrals will be the next practical signals while the federal-versus-state question remains unresolved.