Tennessee SWC (The Tennessee Sports Wagering Counci), the state’s sports betting regulator, sent cease-and-desist orders on Jan. 9 to prediction market platforms Kalshi, Polymarket and Crypto.com’s North American Derivatives Exchange (NADX).

According to The Block, the SWC determined that the platforms’ offering of sports event-based contracts to Tennessee residents constitutes illegal gambling under state law. It demanded they void all trades and refund deposits by Jan. 31.

SWC director Mary Beth Thomas pointed to what she called the platforms’ failure to meet Tennessee consumer protection standards and said they pose a significant threat to the public interest. The Block reported that this marks the first publicly disclosed state-level sanction targeting Polymarket and could influence responses by other states.

All 3 platforms are designated contract markets registered with the U.S. Commodity Futures Trading Commission (CFTC) and are regulated at the federal level. The platforms say they operate legally under federal oversight and that state regulation is invalid. The SWC cited failures to meet state standards including consumer protection, age limits, responsible gaming rules and anti-money laundering (AML), and signalled it would take firm action.

The SWC said it will consider a $10,000 fine for a first violation and up to $25,000 for repeat violations, seeking a state court injunction and even criminal referrals. Under Tennessee law, promoting gambling is classified as a Class B misdemeanor, while aggravated promotion of gambling is classified as a Class E felony.