Tennessee Asks CFTC to Shut Down Prediction Betting Markets

The Tennessee Sports Wagering Council (SWC) has recently taken significant steps to regulate the landscape of sports betting within its jurisdiction. In a proactive move, the SWC dispatched a letter to the Commodity Futures Trading Commission (CFTC), urging the federal agency to refrain from permitting sports event contracts in Tennessee. This communication highlights the growing concerns of state regulators regarding compliance with local laws amid the burgeoning prediction market trend.

Several states, including Illinois, Maryland, Montana, Nevada, New Jersey, and Ohio, have already issued cease-and-desist letters to trading platforms like Kalshi and Robinhood, signaling a unified stance against potential regulatory breaches. Notably, Michigan has also initiated investigations into these emerging markets, showcasing the seriousness with which state regulators are addressing these issues.

The SWC’s correspondence, penned by Executive Director Mary Beth Thomas, is intended to be a crucial part of the CFTC’s upcoming roundtable scheduled for April 30. This meeting focuses on the contentious topic of sports betting regulation, which has already led to judicial scrutiny in states like Nevada and New Jersey.

A core focus of the SWC’s letter is the identification of 13 alleged violations of Tennessee’s laws and regulations linked to prediction markets. The Tennessee Sports Gambling Act (the Act) provides a comprehensive definition of what constitutes a “Wager,” encompassing a variety of betting methods including fixed-odds, future bets, live betting, and proposition bets. The Act explicitly states that any individual or entity accepting money on the outcome of sporting events without a valid license from the SWC is in violation of the law.

The SWC emphasizes the stringent requirements imposed on licensed sports betting operators in Tennessee, which are vital for protecting consumers engaged in sports wagering. Key stipulations include:

• Age Restriction: Individuals under the age of 21 are prohibited from placing wagers.
• Exclusion Lists: Maintenance of lists identifying individuals or categories ineligible to wager.
• Responsible Gambling Practices: Implementation of self-exclusion measures.
• Funding Restrictions: Prohibition on using credit cards and cryptocurrencies for account funding.
• Prohibiting Kiosks: Regulations disallowing kiosks for account establishment or access.
• Anti-Money Laundering Controls: Strict laws and regulations to prevent financial malpractice.
• College Sports Betting Restrictions: Limitations on betting related to college athletes, including specific in-game prop bets.

The SWC asserts that the CFTC-regulated entities currently offering sports event contracts are not meeting the protective standards mandated by the Tennessee Legislature. As the sports betting landscape continues to evolve, it is paramount for regulatory bodies to collaborate closely, ensuring frameworks that safeguard consumers while adapting to industry innovations.

In conclusion, the proactive steps by the SWC reflect a critical commitment to public safety and regulatory compliance within the gambling industry. As states navigate the complexities of sports betting, collaboration among regulatory agencies will be essential in establishing a secure and responsible framework for the future of wagering in Tennessee and beyond.