Prediction Markets in Tennessee

Quick Verdict: Federally Protected by Court Order

Tennessee is one of the most prediction-market-friendly states in 2026 — but for an unusual reason. In February 2026, US District Judge Aleta A. Trauger granted Kalshi a preliminary injunction barring the Tennessee Sports Wagering Council (SWC) from enforcing state law against the platform. Judge Trauger ruled that Kalshi was likely to succeed on the merits of its argument that its sports event contracts qualify as "swaps" under the federal Commodity Exchange Act↗, and therefore fall under exclusive CFTC jurisdiction.

This ruling — issued in the same month as conflicting federal rulings in Nevada and Maryland that went against Kalshi — created a federal court split that has accelerated the case toward higher courts and, potentially, the US Supreme Court↗. For Tennessee residents, the practical effect is straightforward: Kalshi and other CFTC-regulated DCMs remain accessible to TN traders, with strong federal court protection.

In a separate development, on April 10, 2026, the Tennessee Senate passed SB 1992, which would make it a felony to manipulate prediction market outcomes for financial gain. The bill targets bad actors, not retail traders.

The February 2026 Trauger Preliminary Injunction

Tennessee was the first state where the Sports Wagering Council moved aggressively against Kalshi, arguing the platform's sports event contracts violated TN's 2019 Sports Gaming Act, which limits sports wagering to licensed operators. Kalshi sued the SWC in federal court, seeking to enjoin the state from enforcing its sports gaming law against the platform.

Judge Aleta A. Trauger's February 2026 opinion was a landmark ruling on federal preemption. The judge found:

1. Kalshi's sports event contracts are likely "swaps" under the Commodity Exchange Act↗ because they involve a payment contingent on an uncertain future event with no requirement of a physical underlying.
2. As a CFTC-registered Designated Contract Market (DCM), Kalshi is subject to exclusive federal jurisdiction over the listing and clearing of swaps.
3. Tennessee's attempt to enforce its sports gaming law against Kalshi would create irreparable harm by forcing Kalshi to either delist sports contracts (undermining its federally approved business) or face state penalties for federally permitted activity.
4. The balance of equities and public interest favored a preliminary injunction.

The ruling broke from federal court decisions in Nevada (which sided with state regulators) and Maryland (similar), creating a clear circuit split that legal observers expect will eventually require Supreme Court↗ resolution.

SB 1992 — The Senate-Passed Felony Manipulation Bill

On April 10, 2026, the Tennessee Senate passed SB 1992, which would make it a felony to manipulate the outcome of an event tied to a prediction market contract when the manipulator stands to gain financially. The bill creates a new criminal charge specifically targeting individuals who attempt to influence outcomes — for example, an athlete shaving points while holding a sports event contract, or a political operative tampering with vote counts while holding election contracts.

Critically, SB 1992 does not criminalize trading on prediction markets. Retail traders who buy and sell event contracts are explicitly outside the bill's scope. The bill is aimed at preserving market integrity by adding criminal penalties for manipulators who hold positions, much like federal law criminalizes insider trading and market manipulation in securities markets.

The bill must still pass the Tennessee House and be signed by the Governor before becoming law. As of April 21, 2026, no House vote has been scheduled.

Tennessee's Established Mobile Sports Betting Market

Tennessee was the first US state to launch online-only sports betting, going live on November 1, 2020 under the Tennessee Sports Gaming Act. The state has no in-person sportsbook framework — all wagers are mobile-first. As of 2026, eleven licensed operators are live, including FanDuel, DraftKings, BetMGM, Caesars, ESPN BET, Fanatics, and Action 24/7 (a Tennessee-native operator).

The state imposes a 1.85% tax on handle (changed in 2023 from 20% on adjusted gross revenue) — one of the most operator-friendly tax structures in the country. Through 2025, Tennessee sportsbooks have produced over $400M in state tax revenue.

The success of TN's licensed market is one reason the SWC challenged Kalshi in 2025: state regulators view sports event contracts as direct competition that bypasses the licensure and tax framework that licensed operators bear. Judge Trauger's ruling, however, made clear that federal preemption protects Kalshi regardless.

What Tennessee Residents Can Trade

The full federal prediction market catalog is available to TN residents:

• NFL contracts including Tennessee Titans game lines, AFC South division markets, and Super Bowl futures
• NBA contracts including Memphis Grizzlies game and futures markets
• NHL including Nashville Predators game lines and Stanley Cup futures
• MLB — no MLB team in TN, but full league coverage
• College football and college basketball — Tennessee Volunteers, Vanderbilt Commodores, Memphis Tigers, and SEC↗ conference markets
• Politics — 2026 midterms, 2028 presidential, congressional control
• Economic data and Crypto — full catalog

Tennessee is one of the strongest college sports trading states given the SEC↗ football and basketball footprint and the strong regional engagement around University of Tennessee athletics.

Best Platforms for TN Residents

OG.com is our top pick for Tennessee in 2026. Crypto.com's CFTC-regulated sports-first prediction market combines a 4-leg parlay builder, social trading feed, and live in-game contracts — and new traders can earn up to $100 in bonuses with code RANKPREDICTS. Kalshi remains a strong runner-up for the deepest non-sports catalog and lowest published fees.

Polymarket US offers strong politics and crypto market depth and is not subject to TN enforcement action. Full statewide access.

Robinhood provides Kalshi-routed contracts inside the Robinhood app — zero per-contract commission and the same federal protection as direct Kalshi trading.

DraftKings Predictions and FanDuel Predicts are interesting in TN because both companies operate licensed Tennessee sportsbooks. The Predictions products give users access to event contract structures (combos, deeper futures) that complement existing sportsbook accounts.

Fanatics Markets rounds out the options with a sports-first interface available statewide.

How TN Residents Sign Up

The signup process is identical to opening a brokerage account:

1. Visit the platform website or app
2. Provide name, address, date of birth, and last four of SSN
3. Upload government-issued ID for KYC
4. Link bank via Plaid or USDC↗ deposit
5. Begin trading

Must be 18+. Geofencing enforced by IP and device location.

How TN Compares to Neighboring States

Tennessee sits in an interesting regional position. Kentucky has legal mobile sports betting (since 2023) and has not moved against prediction markets. Virginia has legal mobile sports betting and no DCM enforcement. North Carolina has legal mobile sports betting and stable DCM access. Georgia has no legal sports betting and no DCM enforcement. Alabama has no legal sports betting and no DCM enforcement. Mississippi has retail-only sports betting and pursued cease-and-desist letters against Kalshi in 2025 (still under litigation). Arkansas has retail-only sports betting and limited mobile.

For TN residents, this means strong in-state options across both regimes: licensed mobile sportsbooks for traditional bets and federally protected prediction markets for event contracts. The Trauger ruling makes Tennessee one of the most legally certain states for Kalshi traders specifically.

Tax Considerations for TN Residents

Tennessee has no state income tax — making it one of the most tax-favorable jurisdictions in the country for prediction market trading. TN traders owe federal income tax on net gains from event contracts (typically taxed as short-term capital gains or ordinary income depending on the contract structure) but no state-level liability.

Platforms issue 1099 forms when reporting thresholds are met. TN residents should still keep careful trade records — federal reporting and audit obligations apply regardless of state tax treatment.

Outlook: Federally Protected Through 2026, Pending Appeals

Judge Trauger's preliminary injunction protects Kalshi in Tennessee through any final judgment in the case. The Tennessee Sports Wagering Council can — and likely will — appeal to the Sixth Circuit Court of Appeals. Given the federal split with the Ninth Circuit (Nevada) and the Fourth Circuit (Maryland), prediction market preemption is a strong candidate for Supreme Court↗ review in the 2026-27 term.

For now, TN traders enjoy one of the most legally certain prediction market environments in the country. The combination of federal court protection, no state income tax, and access to both licensed sportsbooks and DCMs makes Tennessee one of the best US states for active event contract trading in 2026.