Tennessee Governor Bill Lee has officially enacted two significant pieces of legislation aimed at regulating the gambling landscape in the state. One of the laws prohibits online sweepstakes casinos, while the other establishes a new criminal offense concerning the manipulation of prediction markets.
The ban on sweepstakes casinos, formalized through SB 2136, came after the bill successfully navigated both legislative chambers in April, following extensive amendments and negotiations.
This new law defines “online sweepstakes games” as digital platforms that utilize virtual or dual-currency systems, enabling users to earn digital currency via purchases, bonuses, or promotions, which can then be exchanged for prizes or cash equivalents. The definition encompasses various casino-style games, such as slots, table games, bingo, lottery-style games, video poker, and unauthorized sports betting.
Violations of this law will be treated as breaches of the Tennessee Consumer Protection Act of 1977, allowing for civil enforcement alongside existing gambling regulations.
In addition, Governor Lee signed SB 1992, which introduces a felony charge for those who manipulate prediction markets. This law stipulates that individuals who intentionally affect the outcome of an event while engaged in a prediction market contract are committing a Class E felony.
Tennessee now stands as one of the pioneering states to implement legislation aimed at safeguarding the integrity of prediction markets against manipulation.
In recent developments, Minnesota also passed two bills concerning prediction markets, including a ban on specific event categories, which has led to legal action from the CFTC in federal court over potential impacts on federally regulated derivatives markets.
The trend of states tightening regulations on sweepstakes casinos continues to grow. Indiana was the first to act in March, followed by Maine in early April, and several other states have joined in this month.
In Oklahoma, lawmakers overrode Governor Kevin Stitt’s veto on SB 1589, officially banning “online casino games” where users risk a “representative of value.” Meanwhile, Louisiana enacted two bills last week: HB 883 targets sweepstakes casinos and dual-currency payment systems, while HB 53 updates racketeering laws to include electronic sweepstakes devices.
Additionally, Iowa has enacted SF 2289, which broadens regulatory powers to tackle illegal sweepstakes and unlicensed gambling operations through cease-and-desist orders and injunctive relief.