AG Skrmetti fights to protect Tennessee’s authority to regulate sports wagering
Tennessee Attorney General Jonathan Skrmetti has filed an opening brief to reverse a lower court ruling that allowed Kalshi to continue offering its sports-event contracts in the state.
AG Skrmetti has asked the United States Court of Appeals for the Sixth Circuit to reverse the lower court ruling that blocked Tennessee from enforcing its sports wagering laws against the prediction market operator.
The AG argues that Kalshi’s contracts are essentially sports betting, akin to that offered by licensed sportsbook operators such as DraftKings, FanDuel or BetMGM, and that they fall under state’s Sports Gaming Act.
Kalshi claims that it doesn’t have to follow Tennessee law because its products qualify as “swaps” under the Dodd-Frank Act, placing it solely under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Tennessee regulators disagree with that assertion. In AG Skrmetti’s appeal, they argue that federal laws surrounding Kalshi’s contracts are essentially outdated, created after the 2008 financial crisis, and don’t take into account sports wagering.
“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,” AG Skrmetti said. “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.”
The case is before the Sixth Circuit on an expedited basis, alongside a related case from Ohio.
Tennessee isn’t the only state looking to take on the prediction market industry.
Kalshi has filed suits in multiple states, most recently in Rhode Island after the Attorney General Peter Neronha filed a 32-page complaint in Providence County Superior Court accusing Kalshi and its rival, Polymarket, of offering illegal sports betting in the state.
Despite its growing number of lawsuits, Kalshi has seen some success played out in courts. One was a preliminary injunction granted to it by a Tennessee judge in February, the reason for AG Skrmetti’s appeal, and also success in New Jersey in April after a federal court ruled they could not regulate prediction markets.