Crypto prediction markets Polymarket, Kalshi, and crypto exchange Crypto.com are facing regulatory challenges as the Tennessee betting regulator has sent cease-and-desist letters to the firms. This development comes amid the debate of whether these prediction markets should also be classified as traditional betting platforms.
Polymarket, Kalshi, Crypto.com Face Regulatory Scrutiny In Tennessee
Sports betting lawyer Daniel Wallach revealed in an X post that the Tennessee Sports Wagering Council had sent cease-and-desist letters to Polymarket, Kalshi, and Crypto.com. The regulator demanded that these crypto platforms immediately cease offering sports event contracts to Tennessee customers, void all pending contracts, and issue refunds by January 31.
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 Tennessee Sports Wagering Council warned Polymarket, Kalshi, and Crypto.com that failure to comply with their demand will result in referral of the illegal gambling operations to law enforcement for further investigation.
It is worth noting that this is the second cease-and-desist letter Kalshi and Crypto.com have received. CoinGape reported in December that the Connecticut Department of Consumer Protection (DCP) had issued cease-and-desist letters to Kalshi, Crypto.com, and Robinhood.
Kalshi already filed a motion for a preliminary injunction against Connecticut’s order. Wallach revealed that Connecticut has filed an opposition to the motion, arguing that the prediction market cannot show that it will suffer irreparable harm if it ceases its own “unlawful conduct.” As such, the state argues that public policy weighs decisively against Kalshi’s bid for an injunction.
Increased Scrutiny On Prediction Markets
Tennessee’s cease-and-desist order against Polymarket, Kalshi, and Crypto.com comes amid increased scrutiny on prediction markets. As CoinGape reported, a Polymarket trader made $400,000 by betting that Venezuela’s former President Nicolás Maduro would be out of office by January 31, just before the U.S. captured him.
This immediately raised allegations of potential insider trading due to the timing of the bet. Furthermore, that development has led Congressman Ritchie Torres to introduce the Public Integrity in Financial Prediction Markets Act of 2026, which will bar political insiders from betting on prediction markets.
Congresswoman Dina Titus has also expressed “serious concerns” about Polymarket’s ability and willingness to comply with CFTC regulations following the betting activity around Maduro’s arrest. She also sent a letter to the firm’s CEO, Shayne Coplan, seeking answers regarding the safeguards the company has in place to prevent insider trading and ensure that its market operates fairly and transparently.