Tennessee Attorney General Skrmetti Fights to Protect Tennessee’s Authority to Regulate Sports Wagering

Tennessee Attorney General Skrmetti Fights to Protect Tennessee's Authority to Regulate Sports Wagering

Attorney General Jonathan Skrmetti announced his office filed an opening brief in the United States Court of Appeals for the Sixth Circuit, asking the court to reverse a lower court ruling that blocked Tennessee from enforcing its sports wagering laws against KalshiEX LLC.

Kalshi is an online platform that sells contracts tied to the outcomes of sporting events, such as who wins the game, how a player performs, and whether a team covers the spread. Licensed operators like FanDuel, DraftKings, and BetMGM offer the same kinds of products and operate under Tennessee's Sports Gaming Act, which requires a license, consumer protections, and payment of taxes. Kalshi argues 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 federal Commodity Futures Trading Commission.

Tennessee rejects that theory. Dodd-Frank's swap rules were Congress's response to the 2008 financial crisis, designed to regulate complex financial instruments that banks and large institutions use to hedge against financial risk, not to govern sports wagering. Kalshi's products bear no resemblance to those instruments, and stretching the word "swap" to cover sports bets would render large portions of the statute meaningless. Federal law requires Congress to speak clearly before handing a federal agency sweeping authority over an entire industry-something it plainly did not do for sports wagering. Even if Kalshi's products were swaps, the brief argues that federal law still would not override Tennessee's authority.

"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," said Attorney General Skrmetti. "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.

Read the brief.