Kalshi and Polymarket face a “gambling” accusation that could void your trades and shut down the marke
The post Kalshi and Polymarket face a “gambling” accusation that could void your trades and shut down the marke appeared on BitcoinEthereumNews.com.
On Jan. 9, Tennessee’s sports betting regulator sent a set of letters that, at first glance, looked like the kind of paperwork most crypto natives scroll past. The message was blunt: stop offering sports-related event contracts to Tennessee residents, void unsettled positions, and refund customers by Jan. 31. The recipients, Kalshi, Polymarket, and Crypto.com, sit on the border between finance and gambling. A “yes/no” trade on a game outcome can be framed either as a federally regulated derivative or as an unlicensed sportsbook. Within days, the fight moved to federal court. A US district judge in Nashville, Aleta Trauger, issued a temporary restraining order blocking Tennessee from enforcing its cease-and-desist against Kalshi while the case proceeds. She also set a Jan. 26 hearing on a longer-lasting injunction. Tennessee says the company is running an illegal gambling operation without a state license and allowing underage betting. Kalshi says Tennessee is trying to regulate products that fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). The immediate story is a state crackdown and a compliance deadline. The larger story is a jurisdictional stress test: Can a state sports wagering council fence off contracts that a federally designated exchange claims it has the right to list nationwide? If states keep pushing, what happens to the most promising new retail funnel crypto has found since memecoins: an interface that turns current events into tradable contracts? The jurisdiction fight: who gets to decide what this is? We need to begin with the uncomfortable fact that both sides have a credible-sounding legal theory. From Kalshi’s perspective, it’s not a sportsbook. It’s a designated contract market, the CFTC’s term for an exchange regulated under the Commodity Exchange Act, akin to a traditional futures venue that can serve retail participants. The CFTC has publicly described…
Filed under: News - @ January 17, 2026 11:29 am