- The Tennessee Sports Wagering Council ordered Sportbet and FullStarSportsbook to stop accepting bets in the state by Oct. 30.
- Underdog sued Tennessee in federal court after receiving its own cease-and-desist over its prediction markets.
- A Sept. 25 Sixth Circuit ruling against Kalshi could make Underdog’s case an uphill battle.
NASHVILLE, Tenn. – Tennessee regulators are fighting on two fronts this month. The Tennessee Sports Wagering Council (SWC) ordered Sportbet and FullStarSportsbook to stop taking bets in the state, while Underdog filed a lawsuit against the state after receiving a cease-and-desist of its own.
According to the SWC, both sites are accepting wagers from Tennesseans without a license, violating the Tennessee Sports Gaming Act. The council sent the letters on Sept. 30 and gave the sites until Oct. 30 to comply.
If they don’t, the Sports Gaming Act allows for fines of:
- $10,000 for a first offense
- $15,000 for a second offense
- $25,000 for a third offense
- $25,000 per wager accepted in Tennessee after that
Businesses that work with unlicensed sportsbooks could also face criminal penalties.
Underdog Files Lawsuit
Underdog’s legal sports betting dispute is a different kind of fight.
On Friday, the SWC sent Underdog a cease-and-desist claiming its sports event contracts are wagers under the Sports Gaming Act and can only be offered with an SWC license. The council threatened fines, civil penalties, and criminal investigations. It even mentioned a revocation of the fantasy sports license held by Underdog’s affiliate.
Underdog filed suit four days later in the U.S. District Court for the Middle District of Tennessee. The complaint names Attorney General Jonathan Skrmetti, Mary Beth Thomas, SWC Director of Fantasy Sports Nathan Shaver, Chairman William Orgel and the council’s seven other members.
Per the complaint, Underdog began offering event contracts in Tennessee on Aug. 28 through a federally registered exchange it acquired in March. The company argues the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over those contracts, and it’s asking for a declaratory judgment and a permanent injunction blocking the state from enforcing Tennessee sports betting laws against it.
But the timing isn’t on Underdog’s side.
On Sept. 25, the Sixth Circuit ruled that Kalshi hadn’t shown its sports contracts are swaps under federal law. Even if they were, federal law doesn’t override Tennessee’s or Ohio’s gambling laws.
Federal regulators are leaning Underdog’s way, though.
