Share 
Bonus TL;DR
- Novig and Crypto.com filed separate federal lawsuits in Missouri to block state enforcement against their sports prediction markets.
- The operators argue sports event contracts are federally regulated swaps under the CFTC rather than traditional state-licensed sports wagers.
Novig and Crypto.com have filed separate federal lawsuits in Missouri seeking to stop the state from enforcing its sports wagering laws against their sports-related prediction market products.
The cases escalate Missouri Attorney General Catherine Hanaway’s September cease-and-desist campaign against prediction market operators and add another front to the national fight over whether sports event contracts are governed by state gambling law or federal commodities law.
Novig filed through Ludlow Exchange LLC in the Eastern District of Missouri, while Crypto.com filed through North American Derivatives Exchange in the Western District of Missouri. Both suits ask the courts to bar Missouri officials from applying state sports betting rules to their Missouri-facing offerings.
Hanaway has argued that “Companies cannot repackage sports bets as ‘event contracts’ to evade Missouri law.” She also said after the letters went out, “Chances are they may sue us once they get this cease-and-desist letter.”
Novig and Crypto.com make different arguments against Missouri
Novig argues its event contracts are swaps under the Commodity Exchange Act and therefore fall under the Commodity Futures Trading Commission’s exclusive jurisdiction. Its complaint also points to the CFTC’s Oct. 9 proposal to define event contracts tied to sports, politics, culture and weather as swaps.
The company says Missouri’s licensing system does not fit its exchange model. In its complaint, Novig said, “A licensing regime calibrated to the economics of the house does not readily accommodate a market with no house.” It also argued that complying with Missouri’s system would mean geofencing users in the state and paying Missouri’s 10% tax. Novig’s rulebook, according to the filing, requires traders to be 21 or older.
Crypto.com makes a somewhat different case. It argues Hanaway’s cease-and-desist letter was addressed to Foris DAX, Inc., not the exchange entity bringing the lawsuit. It also says Missouri licensure is not a workable option because the state’s constitution allows only two untethered mobile sports betting licenses and both are already taken. The company added that Missouri has six online sports betting licenses available through professional sports teams and casinos.
Missouri fight lands in a broader national court battle
The Missouri lawsuits come as multiple courts and regulators clash over sports event contracts. The SBC Americas report says Kalshi, Polymarket, Robinhood, and Underdog also received Missouri cease-and-desist letters, though none had filed suit at the time of publication. PrizePicks has already suspended Team Picks in Missouri.
The near-term case to watch is Kalshi’s Iowa appeal in the Eighth Circuit. According to the report, U.S. District Judge Stephen Locher denied Kalshi a preliminary injunction in September. Kalshi’s opening brief is due Nov. 6, with briefing set to conclude Dec. 6.
The issue has produced a wider circuit split. The article says the Third Circuit sided with Kalshi in New Jersey, the Ninth Circuit ruled against Kalshi in Nevada, and the Sixth Circuit sided with Ohio and Tennessee. The U.S. Supreme Court has already been asked to resolve that split, and Missouri has joined the Ohio-led brief urging the justices to take up the dispute.
For Missouri operators and prediction market companies, the next question is whether either federal court grants the injunctions Novig and Crypto.com are seeking while the broader legal fight continues.
Source: As reported by sbcamericas.com.
