Missouri has taken a significant step in regulating prediction markets by ordering six platforms to cease offering sports event contracts. This action, announced by Attorney General Catherine Hanaway on Friday, comes with a clear expectation of legal challenges ahead.
The cease-and-desist letters have been sent to the following companies: Crypto.com, Kalshi, Nova, Polymarket, Robinhood, and Underdog. Hanaway argues that these sports event contracts qualify as unlicensed sports wagering under Missouri law. The companies are directed to halt their operations for Missouri customers unless they secure licenses from the Missouri Gaming Commission (MGC).
"Missourians voted for a safe, well-regulated sports wagering market that supports public education and addresses problem gambling," Hanaway stated in a release. She emphasized that businesses cannot simply rebrand sports bets as 'event contracts' to evade Missouri regulations.
This action places Missouri in the midst of an evolving national debate over prediction markets. The attorney general's stance is framed around the sports wagering system approved by voters in 2024. Missouri initiated legal mobile sports betting in December 2025, mandating that licensed operators adhere to MGC guidelines, including a 10% tax on adjusted gross revenue and an age limit of at least 21 years for bettors.
According to Hanaway, the prediction markets provide a similar product without complying with the licensing, taxation, and responsible gaming rules applicable to sportsbooks. “Any company that wants to offer sports wagering in Missouri must be licensed by the Missouri Gaming Commission, pay the required taxes and fees, and ensure no one under 21 can place a bet,” she added.
Recent rulings by several Circuit Courts of Appeals have determined that sports event contracts do not meet the criteria for swaps under the Commodity Exchange Act (CEA).
While the state has offered operators a path to compliance, Hanaway anticipates future disputes, stating that the cease-and-desist letters imply potential legal action against those who do not comply. In an interview with KFVS 12, she expressed hope that the companies would comply but acknowledged the possibility of lawsuits from them, similar to actions taken by other operators in response to state regulations.
Kalshi and other platforms argue that their contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) because they are listed on regulated exchanges. Missouri state officials counter that these contracts fundamentally represent bets and should be treated as such, thus falling under gaming regulations.
Missouri's move stands out against a backdrop where not all states share a unified approach. The state opted not to join a broader coalition of 44 attorneys general who recently urged the CFTC to clarify its jurisdiction over prediction markets. Ohio's Attorney General Andy Wilson has been instrumental in spearheading this coalition.
This dispute highlights the rapid expansion of legal questions pertaining to prediction markets beyond those states that have officially intervened in existing litigation. Kalshi has encountered two legal setbacks from the Ninth Circuit Court of Appeals, which ruled that its sports event contracts are likely not categorized as swaps under the CEA, allowing Nevada to enforce its gaming laws.
Additionally, a recent court ruling suggests that California tribes could successfully argue that such contracts constitute Class III gaming under the Indian Gaming Regulatory Act. The outcome implies a complex legal landscape that may ultimately require resolution by the U.S. Supreme Court. The Third Circuit has indicated that the CEA may preempt New Jersey’s regulatory attempts, leading to a petition by New Jersey to the Supreme Court for clarification on this matter. Robinhood and Crypto.com have also sought the Court's intervention on related issues.
