Polymarket Faces Cease Order in Tennessee Over Sports Betting Contracts

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Polymarket must stop offering sports contracts in Tennessee and refund deposits by January 31, 2026.
Tennessee warns Polymarket, Kalshi, and Crypto.com of criminal charges for non-compliance.
All three firms argue federal CFTC oversight should override state gambling rules.
The cease order is the first public state-level action against Polymarket since its U.S. return.

Polymarket has received its first publicly known state-level cease-and-desist letter from Tennessee, just weeks after relaunching its platform in the U.S. The Tennessee Sports Wagering Council (SWC) has ordered Polymarket, Kalshi, and Crypto.com’s NDBX to halt sports event contracts for Tennessee users and refund all deposits by January 31, 2026.

Tennessee Issues Cease-and-Desist to Prediction Platforms

The Tennessee Sports Wagering Council sent cease-and-desist letters on January 9 to Polymarket, Kalshi, and Crypto.com’s North American Derivatives Exchange (NDBX). The regulator demands they stop offering sports event contracts to Tennessee users and refund all customer deposits by January 31, 2026.

This action marks the first time Polymarket has received a public state-level enforcement order since its U.S. relaunch in late 2025. The SWC stated these contracts are not in compliance with state consumer protection laws. Executive Director Mary Beth Thomas wrote that such contracts “are an immediate and significant threat to the public interest of Tennessee.”

BREAKING: Tennessee Sports Wagering Council sends cease-and-desist letters to Kalshi (📸), Polymarket and Crypto, demanding that they cease offering sports event contracts to TN customers immediately, void all pending contracts and issue refunds by Jan. 31. Lawsuits are imminent. pic.twitter.com/jDIPIwsrCn
— Daniel Wallach (@WALLACHLEGAL) January 9, 2026

The letter was also addressed to the Tennessee Attorney General, Jonathan Skrmetti, who has supported efforts against similar platforms in other states.

Federal Registration vs. State Gambling Laws

Polymarket, Kalshi, and NDBX are registered with the Commodity Futures Trading Commission (CFTC) as designated contract markets. This registration allows them to offer event-based derivatives nationwide. However, the SWC argues that this does not exempt them from state regulations.

The platforms claim that their federal status under the CFTC should preempt state gambling laws. This argument has been tested in court before, with mixed outcomes. Tennessee’s position is that sports contracts offered on these platforms are wagers and fall under the state’s definition of gambling.

In its letter to the CFTC in April 2025, the SWC had previously warned against allowing these contracts. The agency said such offerings lack key protections like age verification, anti-money laundering rules, and responsible gaming measures.

Legal Threats and Possible Enforcement

Tennessee’s cease-and-desist letters outlined specific penalties for continued operations. The SWC can fine up to $25,000 for repeated offenses under the Tennessee Sports Gaming Act. The letter also referenced possible criminal charges under state gambling statutes.

The platforms were warned that failure to comply may result in a referral to law enforcement for further investigation. Gambling promotion in Tennessee is a Class B misdemeanor, while aggravated gambling promotion can be treated as a Class E felony.

Attorney Daniel Wallach, who shared the cease letters online, commented that legal challenges may follow. He noted on social media that lawsuits are likely, as platforms may contest the state’s authority in federal court.

Polymarket’s U.S. Return and Ongoing Expansion

Polymarket resumed operations in the U.S. in November 2025 after acquiring QCX, a regulated derivatives exchange and clearinghouse. Though the platform remains in a waitlist phase, it has opened access to select U.S. users.

The company currently offers only sports event markets to U.S. participants. Tennessee’s order could affect its rollout plans if other states follow similar actions.

Polymarket did not issue a public response immediately after the letter. Kalshi and Crypto.com also declined to comment.