Bill Lee has signed two major gambling-related measures into law, introducing a statewide ban on online sweepstakes casinos and creating a new criminal offense linked to prediction market manipulation.
The legislation marks Tennessee’s latest move to tighten oversight of emerging gambling and betting-style products.
Sweepstakes Casinos Officially Prohibited
One of the newly signed bills, SB 2136, outlaws online sweepstakes casino platforms operating through virtual or dual-currency systems.
The legislation defines these platforms as internet-based services where users can obtain digital currency through purchases, promotions, or bonuses before redeeming rewards, prizes, or cash equivalents.
The ban applies to a broad range of casino-style offerings, including slots, bingo, table games, video poker, lottery-style products and unlicensed sports betting activity.
Violations will fall under the Tennessee Consumer Protection Act of 1977, allowing regulators to pursue civil enforcement actions alongside existing gambling laws.
Tennessee Introduces Prediction Market Manipulation Offense
Governor Lee also approved SB 1992, which establishes a new felony offense targeting manipulation within prediction markets.
Under the new law, anyone found intentionally influencing the outcome of an event tied to a prediction market contract can face criminal charges. Offenses are classified as Class E felonies.
The measure positions Tennessee among the first US states to directly legislate against prediction market integrity violations.
Growing Regulatory Pressure Across the US
Tennessee joins a widening group of states increasing enforcement against sweepstakes-style gambling products in 2026.
Earlier this year, states including Indiana and Maine introduced similar restrictions, while Oklahoma recently enacted legislation banning certain online casino-style products after lawmakers overrode a gubernatorial veto.
Additional enforcement measures have also emerged in Louisiana and Iowa, where lawmakers expanded powers to target illegal sweepstakes operators through cease-and-desist orders, racketeering provisions and injunctions.
Meanwhile, Minnesota passed legislation limiting specific prediction market categories, prompting legal opposition from the Commodity Futures Trading Commission (CFTC), which argued the state’s actions could interfere with federally regulated derivatives markets.