- The US state of Tennessee has banned crypto service providers from continuing to offer sports betting. This affects, among others, Polymarket, Kalshi and Crypto.com.
- The responsible authority argues that the providers are operating without a valid state license and are therefore violating the Gambling Act.
The providers had sold their products as “event contracts” via prediction markets, but Tennessee clearly classified them as sports betting. Customers must reverse their bets and receive their money back, and operators must block access to Tennessee residents.
The case shows how quickly crypto-based business models come into focus when they want to circumvent existing regulations.
Why the conflict affects the EU
The underlying problem also exists in the DACH region. Germany, Austria and Switzerland have strict gambling laws that clearly regulate digital betting offers.
Crypto bets are legally treated in the same way as those from “classic” betting providers. In Germany and Austria, offering sports betting without the appropriate state license is illegal – regardless of whether stakes are in euros or cryptocurrencies.
Although Switzerland is more liberal in the crypto sector, there are also clear licensing requirements for gambling. Regulation in Tennessee is practically identical to that in the DACH region.
How likely are the consequences for Germany?
Germany does not need a change in the legal situation. The existing gambling law was only reformed in 2021 and is considered one of the strictest in Europe. However, the EU MiCA regulation is now coming into force, which harmonizes crypto services but does not provide for any liberalization for crypto betting.
On the contrary: the more crypto platforms penetrate areas that are traditionally strictly regulated, the more likely additional requirements are to be expected. A tightening of supervision is therefore more likely than a relaxation, especially if crypto betting becomes more popular in Germany.
The actions of the authorities in Tennessee could therefore serve as a precedent – not for opening up, but for consistent enforcement of existing rules.
No Comments