Crypto.com and Novig Sue Missouri in Federal Court Over Sports Event Contract Orders

Since Missouri Attorney General Catherine Hanaway's office announced cease-and-desist letters to six prediction market operators on Sept. 18, two of them have gone to court. The North American Derivatives Exchange (NADEX), which operates Crypto.com's prediction market, and Novig's exchange operator, Ludlow Exchange LLC, each filed federal suits on Friday, Oct. 16. The filings came one day before the Oct. 17 deadline in the letters.

Two suits, two courts

Novig filed in the U.S. District Court for the Eastern District of Missouri. NADEX, on behalf of Crypto.com's platform, filed in the Western District.

Novig's complaint names Hanaway, Missouri Gaming Commission Executive Director Michael Lear and Commission Chair Jan Zimmerman, all in their official capacities. It seeks preliminary and permanent injunctions. NADEX asked for a declaratory judgment that the Commodity Futures Trading Commission (CFTC) has exclusive authority over event contracts, plus a permanent injunction barring state enforcement.

The other four recipients of the letters are Kalshi, Polymarket, Robinhood and Underdog. Court records show no Missouri suits from them.

What Missouri demanded

The letters went out Sept. 16 and 17. They told the companies to stop offering sports event contracts to Missouri residents within 30 days, or get licensed by the Missouri Gaming Commission and pay the required taxes and fees. Missouri taxes licensed sports betting at 10% of gross receipts.

Hanaway's office said five of the six companies either let underage users in or lack adequate safeguards to keep out anyone under 21. The state flagged Crypto.com for allowing users as young as 18. Novig was the one company left out of the age complaint, and its filing says its rulebook limits trading to users 21 and older.

Hanaway said in a statement: "Missourians voted for a safe, well-regulated sports wagering market that supports public education and addresses problem gambling. Companies cannot repackage sports bets as 'event contracts' to avoid Missouri law." The letters say federal law does not preempt state law here and that sports event contracts are not swaps under the Commodity Exchange Act. They warn of enforcement action for noncompliance.

Voters approved Amendment 2 on Nov. 5, 2024. The licensed market launched Dec. 1, 2025.

The platforms' argument

Both companies say their contracts are swaps, which fall under the CFTC's exclusive jurisdiction when traded on a federally registered exchange. If that holds, they argue, the Commodity Exchange Act preempts Missouri's gambling statutes. Sports betting lawyer Daniel Wallach pointed out on Oct. 17 that Novig's complaint calls the contracts "quintessential swaps."

Novig adds a business-model argument. It says users trade against each other rather than against the company, that it does not take the other side of trades, and that it charges no built-in betting margin. State licensing rules that limit trading to Missouri residents would shrink the pool of buyers and sellers, the company says.

NADEX makes a separate access claim. It says Missouri's two direct licenses for mobile sports betting operators are already awarded, so a new entrant cannot get one. That claim is NADEX's own and the state has not responded to it in anything described so far.

No court has ruled on whether the contracts are swaps.

A crowded legal map

The Missouri filings are part of a much larger fight. A litigation tracker maintained by Mick Bransfield, updated Oct. 15, counts prediction market operators as plaintiffs against 18 states in federal court. Novig has already sued New York, Massachusetts, Washington, New Mexico and Wisconsin. Crypto.com has sued Nevada, Maryland, Connecticut and Washington. The tracker lists Kalshi suits in 14 states, none of them Missouri.

Other states are piling on. Ohio sent 10 cease-and-desist letters on Oct. 2. Tennessee sent letters to five operators on Oct. 9. Underdog sued Tennessee on Oct. 13, which the tracker lists as its seventh suit.

The platforms are not walking into an open field. Federal courts have rejected similar preemption claims in disputes over unlicensed sports betting, and U.S. appeals courts have issued conflicting rulings on whether federal derivatives law or state gambling law controls sports event contracts.

Missouri's position is simple. Voters wrote a licensing system, set a tax rate and a minimum age of 21, and the state says anyone offering sports wagers must live under it. The platforms' position is just as direct: they are CFTC-regulated exchanges and say Congress, not Jefferson City, decides how those exchanges operate.

Both cannot be right. Novig's request for a preliminary injunction means a judge in the Eastern District could be asked early whether Missouri can enforce its deadline while the case plays out. The sources describe no hearing date yet. Whether Kalshi, Polymarket, Robinhood and Underdog sue, comply or keep operating without a challenge is also unresolved.