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ZEC $1,166 Crypto.com and Novig sue Missouri to block sports prediction market crackdown
Two prediction market operators filed federal suits on October 16, arguing that federal commodities law covers their sports event contracts.
Key takeaways
- Two of six sued. Crypto.com and Novig were the only two of six warned operators to file federal suits in Missouri as of Sunday.
- The window was 30 days. Missouri gave operators 30 days to stop offering sports contracts or get a license, with a 10% wagering tax and a 21-year age minimum.
- Licenses are limited. Crypto.com says Missouri offers only two direct mobile sports wagering licenses, and both are already awarded.
What happened
Crypto.com-linked North American Derivatives Exchange and Novig filed separate federal lawsuits against Missouri officials on October 16. The complaints challenge cease-and-desist notices that Attorney General Catherine Hanaway issued in September.
The filings came after a 30-day compliance window closed. Missouri had told operators to stop offering sports contracts without a license and to meet the state's 21-year minimum betting age and 10% wagering tax.
Novig, legally Ludlow Exchange LLC, filed in the Eastern District of Missouri as case 4:26-cv-01780. North American Derivatives Exchange, which runs OG.com Prediction Markets, filed in the Western District as case 4:26-cv-00969.
Both companies argue that their sports event contracts fall under the Commodity Futures Trading Commission's exclusive jurisdiction and cannot be regulated under state gambling laws. Crypto.com seeks a declaratory judgment and a permanent injunction against enforcement.
Why it matters
The suits test whether states can apply their sports betting rules to prediction market contracts. Federal appeals courts remain divided on that question, and a related Kalshi case is pending before the Eighth Circuit.
Missouri warned six operators, including Kalshi, Polymarket, Robinhood and Underdog. Only Crypto.com and Novig had filed federal lawsuits in the state as of Sunday, according to a review of court records.
Crypto.com also argues that a state license is not a practical option, because Missouri's constitution provides only two direct mobile sports wagering licenses and both have been awarded. Its complaint adds that Hanaway's office addressed the notice to Foris DAX, Inc. rather than the exchange operating the market.
What is still unclear
- The available case information does not show how Missouri will respond to the lawsuits or whether officials will pursue enforcement while the cases proceed.
Questions readers ask
Why are Crypto.com and Novig suing Missouri?
Both companies want federal courts to stop Missouri from enforcing its sports betting laws against their sports event contracts. They argue that the Commodity Exchange Act gives the CFTC exclusive authority over those contracts.
When did the lawsuits get filed?
Both complaints were filed on October 16, after Missouri's 30-day compliance window expired. Hanaway sent the cease-and-desist letters on September 16.
What did Missouri require of prediction market operators?
Operators were told to stop offering sports event contracts without a state license. Licensed operators must pay a 10% tax on gross sports betting receipts and block customers younger than 21.
Did the other warned operators sue?
As of Sunday, Crypto.com and Novig were the only two of the six warned companies to file federal lawsuits in Missouri. The other four had not brought cases in either federal district in the state.
