Forecast market faces regulatory turmoil: US state governments halt sports contract trading

【BlockBeats】A recent wave of compliance crackdown has erupted in the prediction market circle. On January 11, Tennessee regulators issued “cease and desist” orders to several well-known prediction platforms, demanding they immediately stop offering sports event prediction services to local users. The reason is straightforward—these platforms operated without a state license, crossing the red line of Tennessee’s Sports Gaming Law.

Ironically, these platforms have already obtained compliance status from the U.S. Commodity Futures Trading Commission (CFTC) and have been recognized as designated contract markets, allowing users to trade contracts based on sports event outcomes. But the key issue is—state law and federal law do not fully align in their definitions of “sports betting.” According to Tennessee regulations, any institution involved in sports betting, regardless of the name used, must obtain a state license. This is not optional; it is a mandatory requirement.

The regulators have set a deadline of January 31 to withdraw all platforms, close all open contracts involving Tennessee users, and refund the funds. Failure to comply? They could face fines of $25,000 per violation, and in severe cases, be referred to criminal authorities and prosecuted under the felony of promoting gambling—considered a serious crime under state law.

This incident reflects an increasingly intense conflict: although the federal-level CFTC provides a certain regulatory framework, individual states still have their own definitions and regulations regarding “gambling.” As an emerging sector, prediction markets have yet to fully understand all state boundaries.