Tennessee Governor Bill Lee has signed two major gambling-related bills into law, executing a comprehensive ban on online sweepstakes casinos while simultaneously creating a distinct criminal offense tied to prediction market manipulation.
Sweepstakes Casino Ban Becomes Law
Tennessee Governor Bill Lee signed SB 2136 after it successfully passed both legislative chambers in April, following multiple structural amendments and intensive conference committee negotiations. The law explicitly defines “online sweepstakes games” as internet-based platforms that utilize virtual or dual-currency systems allowing users to obtain digital currency through purchases, bonuses, or promotions and subsequently exchange it for physical prizes or cash equivalents.
The statutory definition covers casino-style games, including slots, table games, bingo, lottery-style games, video poker, and unlicensed sports wagering. Violations are treated as direct breaches of the Tennessee Consumer Protection Act of 1977, empowering the Attorney General to pursue aggressive civil enforcement and asset seizures in addition to existing criminal gambling laws.
Creating a New Prediction Market Manipulation Offense
Concurrently, Gov. Lee signed SB 1992, establishing a new felony offense related to prediction market manipulation. Under the newly enacted statute, a person commits an offense by intentionally influencing or manipulating the outcome of an event while actively participating in a prediction market contract tied directly to that outcome. Violations are classified as a Class E felony. With the measure, Tennessee becomes one of the first states to enact a law targeting prediction market integrity and manipulation.
The development arrives as federal and state friction peaks; last week, Minnesota enacted two bills related to prediction markets, including a ban on several event categories that prompted the CFTC to sue the state in federal court, arguing that Minnesota’s law could improperly affect federally regulated derivatives markets beyond sports-event contracts.
States Expand Sweepstakes Enforcement in 2026
Tennessee joins a rapidly growing list of states that have enacted aggressive laws targeting sweepstakes casinos in 2026. Indiana led the way in March, with Maine following at the beginning of April, while a major wave of enforcement swept multiple capitals this month:
- Oklahoma: The Legislature overrode Gov. Kevin Stitt’s veto of SB 1589, officially enacting a ban on online casino games where users risk a “representative of value”.
- Louisiana: The state enacted two bills; HB 883 directly targets sweepstakes casinos and dual-currency payment systems, while HB 53 updates racketeering statutes to include electronic sweepstakes devices.
- Iowa: The state enacted SF 2289, expanding regulatory authority to pursue illegal sweepstakes and unlicensed operators through cease-and-desist orders and injunctive relief.
