Tennessee Urges Federal Crackdown on Prediction Markets

A Push to Protect State Betting Rules

Addressed to Acting CFTC Chair Caroline Pham, among others, the SWC argues these contracts are bets under the Tennessee Sports Gaming Act and break state law by operating without licenses. The move comes ahead of a CFTC roundtable on prediction markets set for April 30.

The SWC’s stance is firm: prediction markets mimic unlicensed bookmakers, letting users wager on game outcomes, win or lose, without following Tennessee’s strict rules.

Unlike states like Illinois or Nevada, which sent cease-and-desist notices to such platforms, Tennessee is opting for federal pressure, urging the CFTC to yank these markets entirely. With $8.2 billion bet legally in Tennessee last year, the state wants to keep its regulated system intact.

Why Tennessee’s Worried

Prediction markets, per the SWC, sidestep protections baked into Tennessee’s betting laws. Licensed operators must block bets from anyone under 21, maintain banned-player lists, offer self-exclusion, and shun credit cards or crypto for funding.

They also face anti-money laundering checks and can’t touch bets on college player injuries, penalties, or in-game prop bets. Prediction platforms, the SWC says, ignore these, flouting standards meant to shield consumers.

The letter points to “numerous violations” of Tennessee’s regulations, though specifics stay sparse. These markets let users buy contracts tied to sports results, paying out based on outcomes, a setup the SWC calls a wager, no different from a bet slip.

Since only licensed outfits can offer sports betting in Tennessee, a privilege tied to $190 million in 2024 taxes, the SWC sees prediction markets as a loophole threatening the state’s control.

Tennessee’s not alone in eyeing prediction markets. Michigan’s probing them, and six states have pushed back hard. But the SWC’s letter takes a softer tack, leaning on federal muscle rather than direct ultimatums to firms like those in Ohio.

The timing’s no accident. With the CFTC’s roundtable looming, Tennessee wants its voice heard before federal rules shift.