The regulatory authorities in Tennessee, USA, recently issued a cease and desist order to prediction market platforms, requiring them to fully exit the state's market by January 31, 2026. According to the regulatory announcement, the platforms involved must remove all sports event derivative contracts targeted at Tennessee residents and complete full refunds. Each violation beyond the deadline could result in fines of up to $25,000.

The core issue of this regulatory action points to consumer protection deficiencies. State regulators believe that the current prediction market trading model lacks essential investor risk disclosure mechanisms and fund security safeguards. Compared to traditional licensed sports betting with a reserve framework, on-chain derivative trading offers greater freedom, which also demands higher risk tolerance.

This reflects a shift in global regulatory attitudes toward on-chain financial innovation—from cautious observation to active intervention. Although prediction markets are seen as innovative applications of decentralized finance, expanding beyond consumer protection boundaries will inevitably face restrictions from local governments. In the future, more state-level regulators may adopt similar measures.