Crypto.com and Novig challenge Missouri sports betting restrictions

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Crypto.com sues Missouri

Highlights

Crypto.com and Novig sue Missouri over sports contracts.
Both companies argue that CFTC rules take precedence.
Conflicting court rulings leave regulation uncertain.

Both lawsuits were filed Oct. 16 after Missouri Attorney General Catherine Hanaway issued cease-and-desist notices in September. The companies argue that their sports event contracts are financial derivatives governed by the Commodity Futures Trading Commission (CFTC), rather than conventional sports bets. The filings mark another dispute over the division of federal and state regulatory authority, Crypto.News reports.

Crypto.com challenges Missouri gambling requirements

North American Derivatives Exchange, the federally regulated exchange behind Crypto.com's OG prediction market platform, filed its complaint in the Western District of Missouri. It argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over contracts traded on federally designated exchanges. The company wants a court declaration supporting that position and a permanent injunction preventing Missouri from enforcing its gambling laws against the disputed products.

The complaint also challenges how Missouri issued its enforcement notice, which was addressed to Foris DAX rather than the exchange operating the contracts. Crypto.com argues that obtaining a state sports betting license is not a practical alternative because Missouri's two direct mobile wagering licenses have already been awarded. Under state law, licensed operators face a 10% tax on gross sports wagering receipts and must restrict participation to customers aged 21 or older.

Novig seeks protection from state enforcement

Novig filed its case through Ludlow Exchange LLC in the Eastern District of Missouri, naming Hanaway and two state gaming officials as defendants. The company is seeking preliminary and permanent injunctions to prevent enforcement while the dispute over regulatory jurisdiction continues. Its filing also points to a related Kalshi appeal pending before the Eighth Circuit.

Missouri's September notices targeted six operators, including Kalshi, Polymarket, Robinhood, and Underdog. State officials maintain that offering sports event contracts without a gambling license violates Missouri law, regardless of whether the products trade on federally regulated exchanges. The state also alleges that some platforms allow participation by customers younger than its legal betting age.

Court decisions could reshape prediction markets

Federal appeals courts have reached conflicting conclusions about whether commodities law overrides state gambling restrictions. The Third Circuit has supported Kalshi's position in a related dispute, while the Sixth and Ninth Circuits have ruled against it. The pending Eighth Circuit case could therefore influence how Missouri courts handle the new lawsuits.

The outcome matters beyond Crypto.com and Novig because prediction market operators face different regulatory requirements across states. A ruling favoring federal jurisdiction could limit state licensing, taxation, and age restrictions for qualifying contracts. A decision supporting Missouri could instead force operators to change their products or withdraw from some markets. Neither lawsuit establishes that enforcement has been suspended.

Earlier, we reported that Crypto.com launches Tokenized Stocks with instant blockchain settlement and 24/7 trading.

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