Sports Event Contracts: Missouri Rules Challenged

Missouri’s sports-wagering regime sets a minimum betting age of 21 and charges licensed operators a 10% tax on gross sports-betting receipts. Two prediction-market operators are asking federal courts to rule that those requirements do not apply to their sports event contracts.

North American Derivatives Exchange, which operates Crypto.com’s OG prediction-market platform, and Ludlow Exchange, Novig’s operator, filed separate lawsuits on October 16 after a 30-day compliance period expired. Both argue that federal commodities law gives the Commodity Futures Trading Commission (CFTC) authority over their contracts, putting them outside Missouri’s gambling rules.

The disagreement turns on how the contracts are regulated

Missouri treats sports event contracts offered to its residents as sports wagering that requires state authorisation. The companies, by contrast, say their products are traded through federally regulated markets and should be governed by the Commodity Exchange Act, which they argue pre-empts state gambling requirements.

The enforcement campaign began with cease-and-desist notices dated September 16 and 17. Attorney General Catherine Hanaway’s office announced the action on September 18, giving six operators 30 days to stop offering sports contracts in Missouri or comply with state requirements, including licensing, the 21-year minimum age and the 10% tax.

Hanaway’s office maintains that describing a sports bet as an event contract does not remove it from Missouri law. The state also alleged that five of the six targeted companies either allowed people under 21 to access their products or lacked sufficient safeguards against underage participation; Novig was not named in that specific allegation.

The wider dispute over state authority over sports event contracts has produced differing outcomes in federal appeals courts. The Sixth and Ninth Circuits have ruled against Kalshi’s position in related cases, while the Third Circuit has sided with the company.

Two cases, with different requests for relief

North American Derivatives Exchange brought its case in the U.S. District Court for the Western District of Missouri. It seeks a declaration that federal law governs the disputed contracts and a permanent injunction preventing state officials from enforcing gambling rules against them.

The exchange also raises an issue about the notice itself: its complaint says Hanaway’s office sent the cease-and-desist letter to Foris DAX, Inc., rather than North American Derivatives Exchange, the entity operating the federally regulated market. It further argues that state licensing is not a practical route because Missouri’s constitutional framework allows only two direct mobile sports-wagering licences, both already awarded.

Novig’s case was filed in the U.S. District Court for the Eastern District of Missouri by Ludlow Exchange as Ludlow Exchange, LLC v. Hanaway et al., case 4:26-cv-01780. The defendants named are Hanaway and Missouri gaming officials Michael Lear and Jan Zimmerman.

Ludlow Exchange asks for preliminary and permanent injunctions. Its request for preliminary relief points to a separate Kalshi appeal before the U.S. Court of Appeals for the Eighth Circuit, which covers Missouri, and argues that enforcement should be paused while the federal-versus-state jurisdiction issue is considered.

The Eastern District docket reviewed for the report does not show that Novig has obtained the injunction it requested. Crypto.com’s OG platform launched in February 2026 through the exchange’s federally regulated infrastructure, offering contracts tied to sports, financial and cultural events; Ludlow Exchange received CFTC-designated contract market status on June 16, according to the report.

The appeals-court question remains open

The Eighth Circuit is considering the jurisdiction question in separate Iowa litigation involving Kalshi, a case Novig cites in seeking preliminary relief. A Wisconsin federal court previously denied the CFTC’s request for a preliminary injunction against state enforcement, but that decision did not finally resolve whether federal commodities law overrides Wisconsin gambling statutes.

Novig has also challenged state action in Wisconsin, New York, Massachusetts, Washington and New Mexico, according to the report. The broader series of cases reflects an unresolved boundary between federal oversight of derivatives markets and states’ regulation of sports wagering, rather than a settled rule for operators.

Four other companies that received Missouri’s notices-Kalshi, Polymarket, Robinhood and Underdog-had not filed lawsuits in either of the state’s federal districts as of the court-record review cited in the report. Missouri officials had described discussions with Kalshi as ongoing in comments reported on October 2; the next concrete developments are the Missouri courts’ decisions on the requested injunctions and the Eighth Circuit’s handling of the Iowa appeal.