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Missouri Attorney General Catherine Hanaway has issued six prediction market operators with cease-and-desist letters, accusing them of running illegal sports betting operations. The six prediction markets include Kalshi, Polymarket, Crypto.com, Nova, Underdog, and Robinhood.
“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,” Hanaway said in a press release.
The cease-and-desist letters order the prediction markets to stop offering sports-based event contracts in Missouri unless they first obtain licenses from the Missouri Gaming Commission (MGC). Notably, the AG already expects legal pushback against her enforcement campaign.
Illegal sports wagering
AG Hanaway argues that sports contracts qualify as unlicensed, illegal sports betting under Missouri law. She notes that the platforms offer the same underlying products as licensed sportsbooks, but without the licensing, taxation, age verification, and responsible gaming requirements.
The Show-Me State launched legal sports betting in December 2025. Under the MGC’s rules, operators must be licensed and pay a 10% tax on adjusted gross revenue. Moreover, operators are required to conduct age verification to ensure that all bettors are at least 21 years old.
The AG is framing the fight around the state’s sports betting laws. She said, “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.”
Legal pushback expected
While the AG hopes that the six prediction markets will comply with the cease-and-desist orders. She further hopes that they can reach an arrangement that would see them become subject to the state’s sports betting laws and taxation system.
Nevertheless, Hanaway still expects a legal fight. “Chances are they may sue us once they get this cease-and-desist letter,” she said.
On the one hand, prediction markets argue that event contracts listed on exchanges regulated by the Commodity Futures Trading Commission (CFTC) fall under the CEA, giving the CFTC exclusive jurisdiction. On the other hand, state regulators insist that sports-based event contracts are essentially betting, since they look and function like sportsbook markets, and should thus be regulated as gambling.
However, the AG is prepared for a fight, as the letters noted that the state would take legal action against the prediction markets if they failed to comply. Notably, she cited several recent Circuit Court of Appeals decisions against prediction markets ruling that event contracts do not qualify as swaps under the Commodity Exchange Act (CEA).
The expanding state-by-state fight against prediction markets
In July, a group of attorneys general from 44 states, led by Ohio Attorney General Andy Wilson, sent the CFTC a letter regarding the prediction markets issue, arguing that the federal agency doesn’t have jurisdiction to regulate sports event contracts. Missouri was not among the 44 states back then. However, now that the state has joined the fight, it demonstrates how quickly the fight has broadened beyond the original coalition.
Notably, prediction markets are reeling from an unfavorable court ruling at the Ninth Circuit Court of Appeals. In late August, the court ruled against Kalshi, noting that event contracts were likely not swaps under the CEA, giving Nevada the green light to pursue enforcement under its laws.
More recently, the court ruled that California tribes were likely to succeed in arguing that event contracts are Class III gaming under the Indian Gaming Regulatory Act when offered to users on tribal lands. The court also held that the CFTC’s authority over a designated contract market doesn’t displace the IGRA’s separate framework governing gaming on tribal lands.
Interestingly, the Third Circuit ruled in April that the CEA likely preempts New Jersey’s effort to regulate Kalshi’s sports contracts. As a result, New Jersey has petitioned the Supreme Court to resolve the split in the lower courts. With the national map divided on the issue, the matter is likely to end up at the Supreme Court.
