Missouri Attorney General Catherine Hanaway has sent cease-and-desist letters to a group of prediction market and trading platforms, ordering them to stop offering sports-linked event contracts to Missouri residents. The companies named are Polymarket, Kalshi, Crypto.com, Novig, Underdog, and Robinhood.
The state says those products amount to unlicensed sports wagering under Missouri law, even when they are presented as event contracts or swaps. According to the attorney general’s office, the companies have 30 days to stop offering the products in the state or face enforcement action.
State challenges sports-linked contracts
Hanaway said the platforms allow Missourians to access sports event contracts that her office considers illegal. Missouri is treating the activity as the operation of an unlicensed sports wagering business rather than a separate category of federally regulated financial product.
In the cease-and-desist letters, the attorney general argued that prediction market operators cannot avoid state gambling rules simply by relabeling sports bets as event contracts. She said Missouri intends to enforce the sports wagering framework approved by voters and described that system as one designed to support public education and address problem gambling.
Missouri rejects CEA-based defense
The letters say the companies have tried to avoid similar state sports gambling laws elsewhere by arguing that their offerings are event contracts, or swaps, governed by the Commodity Exchange Act and therefore subject to the exclusive authority of the Commodity Futures Trading Commission.
Missouri disputes that position. The state says several federal court rulings have found that these bets do not qualify as swaps and therefore do not fall outside state oversight on that basis. The source article does not specify which rulings were cited in the letters.
Tax and licensing claims
Missouri also argues that the alleged failure to comply with state law has caused economic harm. According to the letters, the platforms have not paid license fees or the 10% wagering tax that applies to adjusted gross revenue from in-state sports wagering.
That claim ties the dispute to the state’s broader sports betting regime, with Missouri presenting the contested contracts as activity that should be licensed and taxed in the same way as other sports wagering offerings available inside the state.
Part of a wider state-federal clash
Missouri’s move adds to a broader conflict between state authorities and prediction market platforms over whether sports event markets are gambling products that states may regulate. The issue has increasingly centered on whether federal law preempts state enforcement when the contracts are offered on markets registered with the CFTC.
The source article points to a Sept. 2 filing by New Jersey asking the U.S. Supreme Court to decide that question after what it described as differing outcomes in the Third and Ninth Circuits. At the same time, the CFTC has continued to assert that it has exclusive oversight of these contracts. CFTC Chairman Michael S. Selig said states seeking to displace federal authority over such markets would be met in court.
For now, the next confirmed step in Missouri is the 30-day compliance window set out in the cease-and-desist letters. If the named companies do not stop offering sports-based event contracts to Missourians within that period, the state says enforcement actions may follow.
Source: news.bitcoin.com