Crypto.com, Novig Sue Missouri Over Sports Event Contracts

Crypto.com and Novig filed separate federal lawsuits in Missouri on October 16, 2026, challenging the state's attempt to regulate their sports event contracts as gambling. Both companies argue that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over their products, preempting Missouri law. Kalshi, Polymarket and Robinhood have not filed suit as of this writing.

Details

The litigation stems from cease-and-desist letters sent by Missouri Attorney General Catherine Hanaway on September 16⁠–⁠17 to six prediction market operators, including Kalshi, Polymarket, Crypto.com, Novig, Robinhood Derivatives and Underdog. Targets had 30 days to stop offering sports event contracts to Missouri residents or obtain a license from the Missouri Gaming Commission — a process that carries a 10% adjusted gross revenue tax and application fees of up to $500,000. The AG also flagged that Missouri's minimum sports betting age is 21, while some platforms allowed users as young as 18.

Crypto.com's exchange entity, North American Derivatives Exchange, Inc., filed in the Western District of Missouri (case 4:26-cv-00969-DGK), arguing the cease-and-desist was addressed to the wrong legal entity and that Missouri has already issued both available mobile sports-betting licenses — making formal compliance structurally impossible. Novig, operating as Ludlow Exchange LLC, filed in the Eastern District (4:26-cv-01780), describing its peer-to-peer contracts as "quintessential swaps" under the CEA and warning that state licensing would undermine its exchange model by restricting the pool of eligible counterparties.

The federal-preemption argument has been tested elsewhere. In June 2026, the CFTC itself sued Kentucky to block a 14.25% state tax on prediction market contracts. Three federal circuits (3rd, 9th) have sided with platforms; the 6th has not. The 8th Circuit — which covers Missouri — is currently reviewing a Kalshi appeal from an Iowa case that will likely be binding precedent for these new suits.

What This Means for the Market

The lawsuits highlight a structural tension: CFTC-regulated event contracts occupy a legally distinct category from traditional sportsbooks, yet multiple states are treating them as equivalent. Until the 8th Circuit rules, the four companies that did not sue face a choice between geofencing Missouri users or waiting for the courts. A platform-friendly ruling could clear the path for prediction markets across the Midwest and beyond, while a state-friendly outcome would force a broader operating overhaul. For related context, see CoinLab's coverage of the CFTC's October 9 proposal to classify event contracts as swaps. This is not investment advice.