Gambling addiction has reached pandemic levels in the United States. Ever since the Supreme Court blocked states from banning gambling on sporting events, companies such as DraftKings and FanDuel have spent billions of dollars building vast global networks designed to generate massive profits at the expense of American families.

Some of the results of unleashing sports betting on American smartphones include:

• 1% of American adults have a “severe” gambling problem.
• Sports betting takes an average of $1,100 per year from family savings.
• 17% of families who gamble are facing bankruptcy.

Even the relaxed state gambling laws did not satisfy the voracious appetite of gambling syndicates to soak up any remaining disposable income. Now, prediction markets, which are regulated by the Securities and Exchange Commission (SEC), are trying to horn in on the sports betting markets, and sports betting markets are trying to horn in on prediction markets.

What is a gamble? Buying stocks and bonds is a bet that the value of those securities will increase before they are sold. That bet is regulated by the SEC. Betting that One Battle After Another will win a Golden Globe Award for best picture is a “prediction,” and so-called “prediction markets” are also regulated by the SEC. However, betting that Indiana will beat Miami of Florida to win a college football championship is considered gambling, not a prediction, and is regulated by state gaming commissions.

You can see how flexible these definitions are. Certainly, all of these wagers are forms of gambling. The question is, who has jurisdiction? Behind the scenes, betting syndicates such as DraftKings are looking to become prediction markets when it suits them, and prediction markets such as Kalshi are trying to become betting syndicates.

There’s another player in all this, however, and that is the states. On Friday, January 9, the State of Tennessee became the first state to send a cease and desist order to prediction markets Kalshi, Polymarket, and Crypto.com. The order, sent from the Tennessee Sports Wagering Council (SWC) and reprinted in whole on the X.com account of Daniel Wallach Legal, requires the companies to:

1. stop offering sports betting in Tennessee immediately
2. void all current bets placed by Tennessee residents, and
3. refund deposits paid by Tennessee residents by January 31, 2026

The idea that a state cannot protect its own citizens from the predatory behavior of sports betting monopolies is anathema to state attorneys general, many of whom have filed suits to keep prediction markets from acting as wolves in sheeps’ clothing, circumventing state gambling laws. The SWC states the issue clearly in their cease and desist letter:

The sports events contracts offered on Kalshi’s exchange […] are an immediate and significant threat to the public interest of Tennessee.

Not so fast, says prediction market Kalshi. The company secured a temporary restraining order from a federal district court preventing Tennessee from enforcing the cease and desist order. The Dallas Express explains Kalshi’s rationale:

Kalshi then sued the Sports Wagering Council and Tennessee Attorney General in federal court, claiming the state does not have the authority to regulate Kalshi’s sale of event contracts — even if they are related to sporting events.

In issuing the temporary restraining order against the state of Tennessee, the judge indicated that “Kalshi is likely to win the case.” This conflicts with a federal district court ruling in Nevada, which found Kalshi in violation of state laws. Kalshi has appealed the Nevada verdict to the U.S. Circuit Court of Appeals.

Both New Jersey and Maryland have separate appeals at the Circuit Court against Kalshi. Those appeals have been joined by 34 states and 38 states, respectively, according to The Dallas Express. 

The current administration in Washington does not seem to support state rights when it comes to regulating gambling. They want it to be regulated federally, as a form of securities market not subject to state regulation. In doing so, they are taking away a state’s right to protect its own citizens from being impoverished by a distant, predatory gambling syndicate. Stay tuned to AddictionNews for updates in the battle against gambling addiction.

Written by Steve O’Keefe. First published January 21, 2026.

Sources:

“State orders Kalshi, Polymarket, Crypto.com to stop offering sports betting in Tennessee,” Local Memphis, January 15, 2026.

“Polymarket faces first state-level cease-and-desist from Tennessee, weeks after US relaunch: report,” The Block, January 10, 2026.

“Kalshi Wins Temporary Block On Tennessee Gambling Laws In Federal Court,” The Dallas Express, January 15, 2026.

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