Tennessee Tests CFTC By Stepping Up Fight Against Kalshi

The Commodity Futures Trading Commission is about to face a difficult decision over its defense of sports prediction markets.

Tennessee Attorney General Jonathan Skrmetti announced that his office was appealing a court decision allowing industry leader Kalshi to continue operating in the state. The Republican appealed the decision to the Sixth Circuit Court of Appeals, insisting the operator is violating the state’s gambling laws.

The CFTC, which regulates the prediction industry, hasn’t hesitated to take other attorneys general to court over their legal actions against Kalshi and other platforms. However, the regulator has yet to take action against a Republican Attorney General.

Skrmetti Skewers CFTC Defense of Predictions

Despite publicly going against his party’s top leaders, Skrmetti hasn’t been pulling any punches in his filing for the appeal. He strongly rejected the argument that sports prediction markets aren’t offering sports betting, refusing to support the CFTC’s official stance. 

In his appeal, Skrmetti rejected the notion that Kalshi’s sports markets were offering “swaps” instead of sports wagers.

Kalshi can call their bets ‘swaps’ all they want, but everyone who so much as glances at the platform understands that this is sports gambling. Tennessee has laws governing wagering on sports—laws that Kalshi is desperately trying to avoid—that ensure sportsbooks provide protections for problem gamblers, pay taxes to support our education system, and provide a fair and transparent service to users. We’re going to keep fighting to protect Tennesseans from operators who want all the benefits of this market and none of the accountability.

How Will the CFTC Respond?

By advancing its case against Kalshi, Tennessee is issuing a public challenge to the CFTC. 

The regulator, which currently only has one commissioner, has been vocal in its defense of the industry. Chairman Michael Selig has called lawmakers overzealous and claimed they are motivated by greed, but those criticisms have been limited to states led by Democrats. 

Five Republican-led states have taken action against prediction markets, but Tennessee’s latest action is by far the loudest. While the White House won’t want to risk angering fellow Republicans ahead of a critical midterm election, it also won’t want Tennessee to inspire fellow conservative markets to follow its lead. 

As a result, the CFTC will now face one of its biggest decisions since Selig took over. 

Support for Sports Prediction Markets is Dwindling

Prediction operators continue to see impressive volume across the US, but the initial public support they received is fading fast. 

Last month, a Siena Poll found that 65% of Americans believe sports prediction markets should be required to follow the same regulations as sportsbooks. The stunning result shows that the CFTC’s campaign to improve the industry’s reputation is failing, emboldening more states to take action against the industry.

While public support may be waning, it appears President Trump and his team remain firm supporters. That has led several operators to continue expanding and investing in their platforms, signaling they still believe the industry’s future is bright.