Tennessee Urges CFTC to Prevent Online Sports Betting Markets

Rewritten Article:

Tennessee is challenging the Commodity Futures Trading Commission (CFTC) on their stance regarding sports prediction markets, expressing its concerns over sports event contracts being offered in the state. In a recent letter to the federal agency, the Tennessee Sports Wagering Council, responsible for overseeing legal betting within the state, argued that these contracts constitute illegal gambling under Tennessee law.

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Tennessee is opposing federal regulations of sports prediction markets in its own territory.
This stance is echoed by states like New Jersey, Ohio, and others with similar concerns.
The main issues center around college sports betting, crypto deposits, and consumer safeguards.

The council contends that these contracts violate the Tennessee Sports Gaming Act by bypassing state licensing regulations and consumer protection standards. According to the letter, "We believe that these sports event contracts are Wagers under the Tennessee Sports Gaming Act and are being offered in violation of Tennessee law and regulations."

Following this move, Tennessee joins a growing list of states that voice their objections against federally regulated prediction markets. Illinois, Michigan, Ohio, Maryland, and others have already issued cease-and-desist orders to operators who haven't gained state approval for offering contracts on sports events.

Although Tennessee hasn't issued a cease-and-desist order, it has made it clear that it wants the CFTC to intervene and stop these contracts from being offered in the state. "We ask that you respect the policy decisions made by the Tennessee Legislature and not permit the offering of sports events contracts," the council added.

Prediction markets function by allowing users to trade contracts based on future sports outcomes. Despite the CFTC's oversight, these markets can operate in all 50 states, yet legal sports betting is only permitted in 39. State regulators argue that these markets evade taxes and lack proper supervision.

The council pointed out several concerns in their letter. For example, some platforms offer bets on injuries, penalties, or college athlete performances – categories not allowed by licensed sportsbooks. Others accept crypto and credit card deposits alongside neglecting essential protections like self-exclusion options and anti-money laundering tools.

Prediction markets push back against these allegations, with Kalshi challenging the legal foundation of the demands, arguing that federal regulations should supercede state gambling laws.

Insights:

Ongoing conflict persists between federal oversight and state-level challenges over sports prediction markets in the U.S.
The CFTC's regulatory actions create legal uncertainties, prompting states like Tennessee to step in.
Multiple states, including Tennessee, have voiced concerns about the potential impact of these unregulated markets on taxes, state licensing, and consumer protection.
The absence of clear federal guidelines has intensified state-level pushback, leading to litigation and regulatory actions against prediction markets.
The issues of election betting and federal regulation of election-related contracts further complicate the landscape.

Tennessee, along with states like New Jersey, Ohio, and others, is challenging the federal regulations of sports prediction markets within their respective territories, citing concerns over college sports betting, crypto deposits, and consumer safeguards.
In a letter to the Commodity Futures Trading Commission, the Tennessee Sports Wagering Council argues that sports event contracts offered in the state violate the Tennessee Sports Gaming Act by bypassing state licensing regulations and consumer protection standards.
Although Tennessee hasn't issued a cease-and-desist order, it has requested that the CFTC intervene and stop the offering of sports event contracts to ensure policy decisions made by the Tennessee Legislature regarding legal sports betting are respected.