The exchange behind Crypto.com’s OG platform and Novig’s operator have sued in federal court over Missouri’s demand that they stop offering sports outcome-based contracts or obtain licenses.
According to court records cited by The Block, the two companies filed separate lawsuits on Friday seeking to block Missouri officials from applying the state’s sports betting laws to these contracts. At the heart of the dispute is whether contracts that trade based on the outcomes of sporting events are regulated by the state or by federal regulators.
30-Day Deadline and 10% Tax Requirement
In letters sent to six platforms on September 16 and 17, Missouri Attorney General Catherine Hanaway demanded that they stop offering sports event contracts to state residents within 30 days or obtain licenses and pay the 10% betting tax.
In the letter sent to Crypto.com, Hanaway also said the platform allowed 18-year-old users to trade, while the minimum age for sports betting in Missouri is 21. The attorney general argues that companies cannot evade state laws by calling sports bets “event contracts.”
“It’s Not Possible for Us to Get a License”
The CFTC-registered North American Derivatives Exchange, which is behind Crypto.com’s OG prediction platform, argued in a lawsuit filed in the Western District of Missouri that the U.S. Commodity Futures Trading Commission (CFTC) has exclusive authority over these contracts. The exchange sought a ruling that federal rules preempt the state’s betting laws, as well as a permanent injunction to block state interference.
Another argument in the complaint is that the licensing option is not viable. The exchange argues that the Missouri Constitution allows only two direct mobile sports betting licenses, and both have already been issued. It also alleges that the attorney general’s letter was sent to the wrong company, Foris DAX Inc., rather than to the exchange.
Novig Wants to Wait for the Outcome of Another Case
Ludlow Exchange LLC, Novig’s operator, sought preliminary and permanent injunctive relief in the Eastern District of Missouri. The company wants the status quo preserved while the 8th Circuit, which includes Missouri, considers the same jurisdictional issue in the Kalshi case in Iowa.
Federal appeals courts are split on the issue: the 6th and 9th Circuits ruled against Kalshi, while the 3rd Circuit ruled in the company’s favor. The new lawsuits in Missouri add to this federal-state jurisdictional dispute.
Kalshi, Polymarket, Robinhood, and Underdog, which received the same notices, had not filed lawsuits in either of Missouri’s two federal districts as of October 18, according to The Block’s review. It was reported on October 2 that Kalshi’s discussions with the attorney general’s office were ongoing.
Not investment advice.