Tennessee outlaws sweepstakes casinos, targets prediction markets
Gov. Bill Lee signed SB 2136 banning virtual sweepstakes casinos and SB 1992 creating a Class E felony for intentional prediction‑market manipulation on May 22.
Tennessee Gov. Bill Lee signed two gambling bills on May 22, the final day of his 10‑day decision window. The legislature approved both measures on April 23 and sent them to the governor’s desk on May 11 after a conference committee resolved differences between the House and Senate.
SB 2136 makes it illegal to operate online sweepstakes games in Tennessee that use virtual, dual or multi‑currency systems where in‑platform currency can be exchanged for cash or cash prizes. The statute lists a range of casino‑style products covered by the ban, including slot and table games, bingo, lottery‑style games, video poker and unlicensed sports wagering. Attorney General Jonathan Skrmetti issued cease‑and‑desist letters to major sweepstakes operators earlier this year; the new law codifies the enforcement posture his office had pursued.
SB 1992 creates a new Class E felony for any person who intentionally influences the outcome of an event while participating in a prediction‑market contract tied to that event. The provision attaches criminal liability to individual conduct in prediction markets rather than banning prediction‑market platforms outright.
Tennessee becomes the seventh state to ban sweepstakes casino operations, joining California, Connecticut, New Jersey, New York, Montana and Louisiana. In 2026, Indiana and Maine advanced measures addressing dual‑currency sweepstakes models, and Louisiana enacted HB 883 on May 15.
The prediction‑market provision follows the state’s earlier civil action against prediction‑market operator Kalshi. Regulators issued a cease‑and‑desist order asking Kalshi to stop offering sports event contracts; Kalshi sued and obtained a federal preliminary injunction on Feb. 19 that allowed it to continue operating. Minnesota passed two prediction‑market bills that prompted a Commodity Futures Trading Commission lawsuit on May 19, and a recent Senate Commerce Subcommittee hearing examined issues related to prediction markets and sports betting.
The governor could have allowed the bills to become law without a signature or vetoed them; by signing both measures, he approved the statutes as enacted by the legislature.
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