TLDR
- Tennessee Gov. Bill Lee signed a bill banning online sweepstakes casinos that use virtual or dual-currency systems
- A second bill creates a new felony offense for manipulating prediction market outcomes
- Sweepstakes violations will be enforced under the Tennessee Consumer Protection Act of 1977
- Tennessee is among the first states to pass a law targeting prediction market integrity
- Several other states including Indiana, Oklahoma, Louisiana, and Iowa have also enacted sweepstakes bans in 2026
Tennessee Gov. Bill Lee has signed two gambling-related bills into law. One bans online sweepstakes casinos. The other makes prediction market manipulation a felony.
The sweepstakes ban, SB 2136, passed both chambers in April. It went through several amendments and conference committee negotiations before reaching the governor’s desk.
The law defines online sweepstakes games as internet-based platforms using virtual or dual-currency systems. These platforms let users obtain digital currency through purchases, bonuses, or promotions and then exchange it for prizes or cash equivalents.
The definition is broad. It covers casino-style games including slots, table games, bingo, lottery-style games, video poker, and unlicensed sports wagering.
Violations of the sweepstakes ban are treated as breaches of the Tennessee Consumer Protection Act of 1977. This means civil enforcement measures can be used on top of existing gambling laws.
Prediction Market Manipulation Now a Felony
The second bill, SB 1992, creates a new criminal offense tied to prediction markets. Under the law, a person commits an offense by intentionally influencing the outcome of an event while participating in a prediction market contract linked to that outcome.
The offense is classified as a Class E felony. Tennessee is now one of the first states to pass a law specifically targeting prediction market manipulation.
The move comes as other states are also addressing prediction markets. Last week, Minnesota enacted two bills related to the industry, including a ban on several event categories.
That Minnesota law prompted the CFTC to sue the state in federal court. The agency argued the state law could improperly affect federally regulated derivatives markets beyond sports-event contracts.
States Ramp Up Sweepstakes Casino Enforcement in 2026
Tennessee is not alone in cracking down on sweepstakes casinos. A growing number of states have passed similar laws this year.
Indiana led the way in March. Maine followed at the beginning of April.
Oklahoma’s Legislature overrode Gov. Kevin Stitt’s veto of SB 1589. That bill bans online casino games where users risk a “representative of value.”
Louisiana enacted two bills last week. HB 883 directly targets sweepstakes casinos and dual-currency payment systems. HB 53 updates racketeering statutes to include electronic sweepstakes devices.
Iowa also acted last week, enacting SF 2289. That law expands regulatory authority to pursue illegal sweepstakes and other unlicensed gambling operators through cease-and-desist orders and injunctive relief.
The pace of state-level action on sweepstakes casinos has picked up through the spring. Multiple states moved forward with enforcement measures in May alone.
Tennessee’s two new laws take effect alongside this broader wave of state gambling legislation. The prediction market manipulation bill adds a layer that few other states have addressed so far.
As of last week, Iowa’s SF 2289 gives regulators new tools to issue cease-and-desist orders against unlicensed gambling operators across the state.
