<div id="readability-page-1"><div><div><p><span>Author: Azuma, Odaily Planet Daily</span></p><p><span>The booming prediction market is facing a real challenge.</span></p><p><span>On January 9th, US local time,</span><strong><span>The Tennessee Sports Wagering Council (SWC) issued injunctions to prediction market platforms such as Kalshi, Polymarket, and Crypto.com, requiring these platforms to stop offering sports prediction contracts to residents of the state, on the grounds that these companies are engaged in illegal gambling operations without state government permission.</span></strong></p><p><span>Author: Azuma, Odaily Planet Daily</span></p><p><span>The booming prediction market is facing a real challenge.</span></p><p><span>On January 9th, US local time,</span><strong><span>The Tennessee Sports Wagering Council (SWC) issued injunctions to prediction market platforms such as Kalshi, Polymarket, and Crypto.com, requiring these platforms to stop offering sports prediction contracts to residents of the state, on the grounds that these companies are engaged in illegal gambling operations without state government permission.</span></strong></p><p><strong><span><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7425750_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="391" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7425750_image3.png"/></span></strong></p><h2><strong><span>Focusing on Tennessee, what does sports betting mean?</span></strong></h2><p><span>Let's turn our attention to Tennessee, the central state of this event.</span> In 2019, Tennessee passed the Tennessee Sports Gaming Act, officially legalizing sports betting. While then-Governor Bill Lee held reservations about gambling, he allowed the bill to pass without vetoing it. Between 2021 and 2022, the Tennessee legislature passed legislation establishing a dedicated regulatory committee to oversee licensing and regulation. This committee, formerly known as the Sports Wagering Advisory Council, was later renamed the Tennessee Sports Wagering Council (SWC), the same committee mentioned at the beginning of this article that issued injunctions against Kalshi, Polymarket, and Crypto.com. Currently, the SWC is the only sports betting regulatory body in Tennessee, responsible for operating licenses, compliance oversight, rulemaking, and enforcement. The State Sports Commission (SWC) mandates that all sports betting providers must obtain a license from the SWC to operate in the state; 11 licenses have been issued so far (see above). Only residents aged 21 and older can access the services, and betting must be verified through geolocation to ensure it takes place within the state. Regarding taxation, the state levies a 1.85% tax on total bets—previously an income-based tax scheme, it switched to a total betting-based tax in 2023. The sports betting market contributes significantly to Tennessee's tax revenue. According to statistics from Sports Book Review (see chart below, data as of July 2025), Tennessee's sports betting market generated $5.268 billion in total betting revenue in 2024, with tax contributions reaching $97.16 million; in the first seven months of 2025, total betting revenue reached $2.4 billion, with tax contributions reaching $56.4 million. </p><p><strong><span><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7425752_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="703" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7425752_image3.png"/></span></strong></p><p><span>But this huge and still growing pie is now being gradually eroded by Polymarkets.</span></p><h2><span>How are prediction markets eroding the old world?</span></h2><h2><span>How do prediction markets erode the old world?</span></h2><h2><span> On December 3, 2025, Polymarket announced that it had received a license from the CFTC and would return to the US market after nearly four years. Prior to this, Kalshi and Crypto.com's prediction market platform, Truth Predict, had already opened its doors to US users with CFTC approval. Currently, sports betting is explicitly classified as a gambling service, with regulatory authority belonging to individual states. However, prediction market platforms like Polymarket are generally considered new entities providing &#34;event contract&#34; trading services. &#34;Event contracts,&#34; in terms of their asset nature, are considered financial derivatives and fall under the CFTC's regulatory scope. This allows prediction markets to circumvent the stringent regulations governing betting services—they don't need state licenses, user protection regulations such as addiction control, or high betting taxes paid to states; yet they can still offer sports betting services similar to traditional betting, objectively creating a degree of &#34;regulatory arbitrage.&#34; If prediction markets were still just small-scale testing grounds, that would be one thing, but the reality is that their growth rate is even more outrageous than the already phenomenal sports betting market—in 2025, the total transaction volume of prediction markets was approximately $40 billion, an increase of about 400% from $9 billion in 2024. Data Dashboards (see below) compiled by Dune show that sports-related event contracts have long been the category with the highest trading volume in the prediction market. The capital market has already sensed the growing threat that Polymarket poses to traditional sports betting services. The two giants in the sports betting market, DraftKings and Flutter Entertainment, recorded declines of 11.7% and 16.1% respectively over the past year. This coincided with a bull market in US stocks, with the Dow Jones Industrial Average rising 12.97% for the year, the Nasdaq Composite Index rising 20.36%, and the S&amp;P 500 Index rising 16.39%; moreover, the sports betting market continued its eight-year upward trend. </span></h2><p><span><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7425754_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="474" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7425754_image3.png"/></span></p><p><strong><span>Whether it's Tennessee, which relies on sports betting for tax revenue, or the capital forces that effectively control the sports betting market, neither is likely to agree to the emergence of a new player like the prediction market.</span></strong></p><h2><span>This friction is not an isolated case. How will the prediction market retaliate?</span></h2><h2><span> In fact, Tennessee's ban on prediction markets is not an isolated case. Maryland, Ohio, Illinois, New Jersey, Nevada, Montana, Michigan, and Connecticut have all previously cracked down on prediction markets for similar reasons. Since Polymarket only returned to the US market last December, Kalshi has faced even greater regulatory scrutiny. In response, Kalshi filed lawsuits against Nevada, New Jersey, and Maryland, arguing that it had already complied with higher-priority federal regulations and was no longer required to comply with state regulations, but the results were unsatisfactory. The lawsuit in Nevada was the first to proceed. The district court initially supported Kalshi, but then reversed course last November, ruling against Kalshi. Judge Andrew Gordon determined that Kalshi's contracts for sports events were very similar to sports betting and therefore fell under the jurisdiction of Nevada betting regulations. Kalshi has appealed to the U.S. Court of Appeals for the Ninth Circuit. In New Jersey, the district court ruled in favor of Kalshi, but the state's betting regulator has appealed to the U.S. Court of Appeals for the Third Circuit. In Maryland, the district court heard the betting regulator's case. Judge Adam B ruled that Kalshi... Kalshi has appealed to the U.S. Court of Appeals for the Fourth Circuit for failing to prove that &#34;Congress has a clear and explicit intention to strip states of their power to regulate gambling.&#34; The law firm Benesch commented that, &#34;As the national debate continues, similar disagreements are expected at the appeals court level, which will lay the groundwork for the Supreme Court to resolve this issue in the coming years… If the appeals courts happen to unanimously support Kalshi's position, other prediction markets may follow suit and begin similar operations before the Supreme Court hears the case; however, if the appeals courts reach a different conclusion, companies in similar situations may wait for clearer legal signals before taking action. In any case, Kalshi's lawsuit will create a precedent with a direct and far-reaching impact on the national sports betting and gambling industry.&#34; In conclusion, whether prediction markets should comply with state gambling regulations remains an open question. The fundamental contradiction lies in the similarities between prediction markets and sports betting in terms of product and service providers, and the differences in regulatory requirements. This is a tug-of-war over regulatory adaptation. Until the appellate courts and even the Supreme Court issue a final ruling, the gray area between prediction markets and sports betting will persist for a long time, and regulatory conflicts will be difficult to avoid. In the short term, states may continue to defend their regulatory rights and tax base through enforcement and litigation; while prediction market platforms will attempt to use federal compliance and innovation narratives as a shield to gain greater room for survival.</span></h2></div></div></div>

FLTR

DKNG

<p>The Tennessee Sports Wagering Council has issued injunctions against prediction market platforms like Kalshi, Polymarket, and Crypto.com, citing illegal gambling operations. This follows Tennessee's legalization of sports betting in 2019 and the establishment of the SWC as the regulatory body. While traditional sports betting is heavily regulated, prediction markets are classified as financial derivatives, allowing them to operate with less oversight. The prediction market's rapid growth poses a threat to established sports betting companies, leading to declines in major players like DraftKings and Flutter Entertainment.</p>

The prediction market, which has shaken up the multi-billion dollar gambling industry, is being chased by the old order.