Two federally registered prediction market exchanges sued Missouri on Friday 16 October, the day the state’s 30-day ultimatum on sports event contracts ran out. North American Derivatives Exchange (NADEX), the exchange behind Crypto.com’s prediction market, filed in the Western District of Missouri, and Ludlow Exchange, the company that runs Novig, filed in the Eastern District, The Block reported on 18 October after reviewing the court records. Both want federal judges to stop Attorney General Catherine Hanaway from applying Missouri’s sports wagering law to contracts they list under the supervision of the Commodity Futures Trading Commission (CFTC).
Four other companies that received the same letter, Kalshi, Polymarket, Robinhood and Underdog, had not sued in either Missouri district as of Sunday 18 October, according to The Block. None of them answered its requests for comment.
The two lawsuits land in the middle of the largest unresolved legal fight over prediction markets in the United States: is a contract that pays out on the result of a football game a federally regulated derivative or a bet that each state can license, tax and ban? Three federal appeals courts have answered, and they do not agree. New Jersey has already asked the Supreme Court to decide.
For crypto readers this is not a side show. One of the two plaintiffs is the derivatives arm of Crypto.com, and the theory both exchanges rely on, that registration with the CFTC overrides state law, would decide whether crypto companies can sell sports prediction markets nationwide under one federal licence or need permission state by state.
Crypto.com and Novig both argue the CFTC alone regulates these contracts
Crypto.com’s case is brought by NADEX, a designated contract market registered with the CFTC that operates the Crypto.com “OG” prediction market, launched in February 2026 according to crypto.news. The Western District docket is No. 4:26-cv-00969. NADEX asks for a declaratory judgment and a permanent injunction. Its central claim, as quoted by The Block, is that the Commodity Exchange Act gives the CFTC “exclusive jurisdiction” over its contracts, which would push state gambling law aside.
The complaint also makes two narrower points. It says Hanaway’s letter was “incorrectly addressed” to Foris DAX, Inc., the Crypto.com group company, rather than to the exchange itself. And it says a Missouri licence is not a realistic way out: under the state’s constitution there are only two direct mobile sports wagering licences, and both have already been awarded, according to The Block’s account of the filing.
Novig’s case is Ludlow Exchange, LLC v. Hanaway et al., No. 4:26-cv-01780, in the Eastern District. Ludlow, Novig’s CFTC-regulated entity, obtained designated contract market status on 16 June, crypto.news reported. Besides Hanaway, the defendants include Jan Zimmerman and Michael Leara, who are listed on the Missouri Gaming Commission’s website as its chairman and executive director (crypto.news spells the second name “Lear”).
Novig asks for a preliminary injunction as well as a permanent one. Its argument for quick relief is about timing: the Eighth Circuit, the appeals court that covers Missouri, is already hearing Kalshi’s appeal in an Iowa case on the same question, and Novig wants the status quo kept until that court rules.
Missouri is not Novig’s first state. According to crypto.news it has also gone to court against officials in New York, Massachusetts, Washington, New Mexico and Wisconsin. It sued Wisconsin’s attorney general Josh Kaul and gaming administrator John Dillett on 14 August, and a preliminary pretrial conference in that case is set for 20 October, crypto.news reported. The Wisconsin court is not friendly ground: in July, Judge William Griesbach refused the CFTC’s own request for a preliminary injunction against state gambling enforcement there, finding no likely success on preemption at that stage.
No court has granted either company anything in Missouri yet, and no hearing date had been reported by Monday morning. Coindaro has not seen the complaints themselves; their contents here come from The Block and crypto.news.
What Missouri demanded: a licence, the 10% tax and no one under 21
Hanaway sent the cease-and-desist letters on 16 and 17 September and announced them on 18 September. They went to six operators: Polymarket, Kalshi, Crypto.com, Novig, Underdog and Robinhood. Each had 30 days to stop offering sports event contracts to people in Missouri, or to obtain a licence from the Missouri Gaming Commission and pay the state’s 10% wagering tax, The Block reported. The letters warned of “enforcement action by the state” for those that did not comply.
The attorney general’s position, as described by Spectrum News, is that federal law does not preempt Missouri’s gambling rules and that sports event contracts are not “swaps” under federal law. In her statement she said the companies could not relabel sports bets as event contracts to get around state law, and added: “Any company that wants to offer sports wagering in Missouri must be licensed by the Missouri Gaming Commission.”
Age is the second front. Missouri’s constitution sets 21 as the minimum age for sports betting, with age checks. Hanaway said five of the six companies let under-21 users in or lack safeguards to stop them; Novig was not among the five. Her letter said Crypto.com lets users as young as 18 trade, The Block reported.
Missouri itself is new to legal sports betting. Voters approved Amendment 2 in November 2024, and licensed betting started on 1 December 2025, with the Gaming Commission as regulator and 10% of gross receipts going to the state. The letters defend that market. A prediction market that pays no Missouri tax and accepts 18-year-olds competes with the licensed sportsbooks on terms they cannot match.
| What | Figure or date | Source |
|---|---|---|
| Cease-and-desist letters | Sent 16-17 Sep 2026, announced 18 Sep | The Block, Spectrum News |
| Companies targeted | 6: Polymarket, Kalshi, Crypto.com, Novig, Underdog, Robinhood | Spectrum News |
| Time to comply | 30 days | The Block |
| Missouri sports wagering tax | 10% of gross receipts | Spectrum News |
| Minimum betting age | 21 (Crypto.com allows 18, per the AG) | The Block |
| Direct mobile licences | 2, both awarded (NADEX’s claim) | The Block |
| Legal sports betting in Missouri since | 1 Dec 2025 | crypto.news |
| Lawsuits filed | 16 Oct 2026, W.D. Mo. and E.D. Mo. | The Block, crypto.news |
Kalshi, Polymarket, Robinhood and Underdog have not sued Missouri
The absence of the biggest names is the other half of the story. Kalshi was the first of the six to answer the letter, and the attorney general’s office described “ongoing discussions” with the company, Spectrum News reported on 2 October, as cited by The Block. Nothing public says where those talks stand.
Kalshi has instead argued its case in public. Nicole Kagan, its head of research, told St. Louis Public Radio that Kalshi runs “a peer-to-peer exchange”. “We’re not the house,” she said, according to the interview published by KCUR on 6 October.
Underdog sued Connecticut in September over a similar crackdown but has not gone to court in Missouri, The Block said. Robinhood and Polymarket have made no public move in the state. Whether any of the four still offers sports contracts to Missouri residents today was not clear from public reporting.
One company that did not get a letter has already stepped back. PrizePicks, which the Gaming Commission licensed as a daily fantasy sports operator in 2024, pulled its sports contracts in Missouri in early October while keeping its non-sports markets, SBC Americas reported.
Prediction market vs sports betting: why the same contract gets two labels
A sports event contract pays a fixed amount, typically $1, if an outcome happens (a team wins, a total is exceeded) and nothing if it does not. Its price, between zero and $1, reads as the market’s probability. Customers trade against each other on an exchange, and the exchange earns fees, which is Kalshi’s “not the house” point. A sportsbook, by contrast, sets odds and takes the other side of the bet.
Under the Dodd-Frank reforms, the Commodity Exchange Act counts as a “blockchain, where users swap tokens directly from their own wallets without handing custody of their funds to a company.">swap” a contract that depends on whether an event occurs when that event is “associated with a potential financial, economic, or commercial consequence”. Swaps traded on a CFTC-registered designated contract market (DCM) fall under the CFTC. If a football result qualifies, the exchanges say, the CFTC has exclusive jurisdiction and states cannot apply their gambling laws, either because Congress occupied the whole field (field preemption) or because 50 different state rules would clash with the federal scheme (conflict preemption).
States answer that a game result is a sporting outcome, not an economic event, and that gambling has always been a state matter. If the exchanges are right, the CFTC becomes the de facto national regulator of sports betting. If the states are right, Kalshi, Crypto.com and the rest need a licence in each state and must follow each state’s tax and age rules.
Three appeals courts, two answers: the circuit split explained
The federal appeals courts that have ruled so far split two to one against the exchanges. All three decisions came at the preliminary injunction stage, so none is a final judgment on the merits.
Third Circuit (New Jersey): for Kalshi, 2-1, 6 April 2026
In KalshiEX v. Flaherty, No. 25-1922, the Third Circuit kept in place a preliminary injunction that stops New Jersey from enforcing its gambling law against Kalshi. Judge David Porter wrote for the majority, joined by Chief Judge Michael Chagares; Judge Jane Richards Roth dissented. According to a Skadden summary, the majority read the swap definition broadly, held that sports contracts on a DCM are likely swaps, and found both field and conflict preemption. Judge Roth would have left state gambling law in force. The judgment date of 6 April comes from the Supreme Court docket.
Ninth Circuit (Nevada): against Kalshi, 3-0, 28 August 2026
In KalshiEX v. Assad, a Ninth Circuit panel affirmed the dissolution of Kalshi’s injunction against Nevada’s gaming regulators. Judge Ryan Nelson wrote the opinion, Judge Bridget Bade joined, and Judge Kenneth Lee concurred. The panel said the swap definition is about events with economic consequences, not the result of a sporting contest, and warned that Kalshi’s reading had no limit because almost anything has some possible economic effect. Kalshi’s claims on election contracts went back to the lower court. Requests by Crypto.com’s NADEX and by Robinhood over their sports contracts in Nevada were rejected as well.
Sixth Circuit (Ohio and Tennessee): against Kalshi, 3-0, 25 September 2026
Judge Julia Smith Gibbons wrote for a unanimous panel that Kalshi had not shown its sports contracts meet the swap definition, and that even if they did, the Commodity Exchange Act would not preempt state gambling law, The Block reported. The court noted Kalshi had conceded in earlier litigation that its sports contracts have “no inherent economic significance”. It upheld the March refusal of an injunction in Ohio and vacated the February injunction Kalshi had won in Tennessee. The CFTC, led by its sole commissioner Michael Selig, had filed a brief supporting Kalshi in that appeal in May. Kalshi spokesperson Dani Lever said the law does not require “intrinsic” financial consequences “and even if it did, sports clearly do”.
| Court | States | Date | Outcome | Vote |
|---|---|---|---|---|
| Third Circuit | New Jersey | 6 Apr 2026 | Sports contracts likely swaps, state law preempted | 2-1 for Kalshi |
| Ninth Circuit | Nevada | 28 Aug 2026 | Likely not swaps, Nevada can enforce | 3-0 against |
| Sixth Circuit | Ohio, Tennessee | 25 Sep 2026 | Not shown to be swaps, no preemption either way | 3-0 against |
| Fourth Circuit | Maryland | Pending | No decision yet | – |
| Eighth Circuit | Iowa (covers Missouri) | Pending | Kalshi appeal after injunction denied | – |
Missouri sits in the Eighth Circuit, which has not ruled. That is why the Iowa appeal matters more to Crypto.com and Novig than anything decided in Philadelphia, San Francisco or Cincinnati: a federal judge in Missouri is bound by Eighth Circuit precedent, not by the others. Until that court speaks, the district judges in Kansas City and St. Louis must choose between persuasive authorities that point in opposite directions, with the more recent ones going against the exchanges. Kalshi’s Maryland appeal in the Fourth Circuit is also still pending, The Block reported.
The Supreme Court question: New Jersey, Crypto.com and Robinhood petitions
New Jersey filed its petition for review of the Third Circuit ruling on 2 September, in Flaherty v. KalshiEX, No. 26-299. The Supreme Court docket shows Kalshi’s response deadline was pushed from 8 October to 9 November. Amicus briefs have already come in from, among others, the National Football League, the American Gaming Association, a group of states led by Ohio, 145 Native American tribes and former CFTC chairman Gary Gensler. The Court has not decided whether to hear the case.
The losing side in Nevada has also gone to Washington. Robinhood Derivatives filed a petition on 10 September (No. 26-338) and Crypto.com’s NADEX one on 11 September (No. 26-344), both against the Ninth Circuit’s 28 August decisions in their Nevada cases, according to the Supreme Court’s dockets. Nevada’s responses are due on 13 and 16 November after extensions. The Court therefore has petitions from the losing side in each of two opposed circuits; a split between appeals courts on a federal statute is one of the main grounds on which it takes cases.
Scale explains why both sides keep spending on lawyers. Kalshi alone recorded $38.67 billion in trading volume in August, according to The Block’s data, and more than a dozen states have taken enforcement action or sued Kalshi over sports contracts.
Why the Missouri fight matters for crypto exchanges
Prediction markets have become a product that crypto companies sell next to coin trading. Crypto.com launched its OG platform in February 2026 with sports, financial and cultural contracts, crypto.news reported, and the exchange behind it is the one now suing Missouri. Robinhood, which also sells crypto, has its own petition at the Supreme Court. Polymarket, the best-known crypto-native venue, settles trades in the USDC stablecoin; our Polymarket project page explains how it works.
The state actions target sports contracts, the part of the business that overlaps with licensed sportsbooks. If a state can force a licence for each sports contract, a crypto platform would need dozens of gambling licences, pay each state’s tax and apply each state’s age limit. In Missouri, by NADEX’s account, no licence is even available.
The legal question is CFTC preemption: does federal registration as a designated contract market shut out state gambling law? The CFTC under Selig has said yes in court, backing Kalshi in the Sixth Circuit, and the agency is also preparing its own retail rules, as covered in our report on the CFTC consultation on retail crypto trading. Crypto firms already know the state-by-state model from money-transmitter licences; a Supreme Court ruling for the states would extend it to event contracts. Our explainer on how the SEC and CFTC are writing US crypto rules sets out the wider division of work between the two agencies.
For Crypto.com users in Missouri, the lawsuit does not say whether sports contracts stay open while it runs, and NADEX asked for permanent relief rather than a quick injunction, so the case may move slowly unless the state acts first. Our Crypto.com review covers the exchange’s wider product set.
In Europe, gambling regulators already block Polymarket
European readers have seen this argument settled the other way, at least for now, and by gambling regulators rather than financial ones. In France, the Autorité nationale des jeux (ANJ) ordered Polymarket’s website blocked in mid-July 2026, adding to a ban on transactions with the platform imposed in November 2024, The Local reported. According to the gaming regulator, visits to Polymarket from French internet addresses still reached 578,751 in the previous month. The AMF, France’s market regulator, is not the authority acting here.
In Italy, the Customs and Monopolies Agency (ADM), which licenses gambling, put Polymarket on its list of banned sites on 10 July 2026, and the site became unreachable from Italy on 27 July, according to Il Sole 24 Ore. An earlier ADM block from November 2025 had been overturned by the Lazio regional administrative court (TAR). This time Polymarket withdrew its request for interim relief on 19 August and is pursuing the case on the merits. Consob, the markets regulator, is not the actor.
Missouri’s attorney general is making the same claim as the ANJ and ADM: a contract on a sports result is a bet and belongs to the gambling regulator. The difference is that in the United States a federal market regulator, the CFTC, has registered these exchanges, and federal courts now have to decide whether that registration overrides state gambling law.
Next dates: Wisconsin on 20 October, the Supreme Court after 9 November
- On 20 October, Novig has a preliminary pretrial conference in its Wisconsin case (crypto.news).
- By 9 November, Kalshi must answer New Jersey’s petition at the Supreme Court (docket 26-299); the justices can only consider it at a conference after that.
- In Missouri, the first sign of movement will be a hearing date on Novig’s preliminary injunction request, or a state enforcement action against any of the six companies. Neither had been reported by Monday.
- At the Eighth Circuit, Kalshi’s Iowa appeal has no reported argument date; its decision will bind the Missouri courts.
- At the Fourth Circuit, a decision in Kalshi’s Maryland case could come at any time.
Also unresolved: whether Kalshi, Polymarket, Robinhood or Underdog file their own Missouri suits now that the deadline has passed, and whether Kalshi’s talks with the attorney general’s office lead anywhere.