Crypto.com, Novig Sue Missouri Over Sports Event Contracts in Regulatory Clash

Crypto.com’s prediction-market platform and Novig have filed federal lawsuits against Missouri authorities after the state classified sports-related event contracts as gambling.

The Block reported on October 18 that Crypto.com’s prediction-market exchange and Novig each filed suit in federal court on October 16 seeking to block the Missouri Attorney General’s Office from applying sports-betting rules to their businesses. The filings came as the state’s deadline to halt operations expired.

Earlier, Missouri Attorney General Andrew Bailey’s office sent cease-and-desist letters on September 16 and 17 to six companies: Crypto.com, Novig, Kalshi, Polymarket, Robinhood and Underdog. The letters said the companies must stop offering sports event contracts to Missouri residents within 30 days or obtain approval from the Missouri Gaming Commission and pay a 10% sports-betting tax.

The attorney general’s office said companies cannot sidestep Missouri law by packaging sports betting as “event contracts.” It also said Crypto.com’s platform allows users as young as 18 to trade. Missouri’s legal minimum age for sports betting is 21.

North American Derivatives Exchange, or NADEX, which operates Crypto.com’s prediction-market platform, filed its lawsuit in the U.S. District Court for the Western District of Missouri. NADEX argued that, as an exchange registered with the Commodity Futures Trading Commission, the CFTC has exclusive authority over event contracts under the Commodity Exchange Act and that federal law preempts state gambling statutes.

NADEX asked the court for a declaratory judgment confirming that authority and a permanent injunction barring state enforcement. It also said Missouri’s two direct licenses for mobile sports-betting operators have already been awarded, making it impossible for a new entrant to secure one.

Novig also sued in the U.S. District Court for the Eastern District of Missouri through its exchange operator, Ludlow Exchange, seeking preliminary and permanent injunctions. Novig said Kalshi’s Iowa case on the same issue is already before the U.S. Court of Appeals for the Eighth Circuit and argued that the status quo should be preserved until a ruling is issued.

U.S. courts have split on whether federal derivatives rules or state gambling laws take precedence over sports event contracts offered on prediction markets. The Sixth and Ninth Circuit Courts of Appeals ruled against Kalshi in related cases, while the Third Circuit sided with the company.

Meanwhile, Kalshi, Polymarket, Robinhood and Underdog had not filed lawsuits in Missouri’s eastern or western federal courts as of October 18, the report said. Kalshi is reportedly in talks with the Missouri Attorney General’s Office. The lawsuits were filed as the clash over whether federal or state authorities regulate prediction-market products continues.