Crypto.com, Novig Sue Missouri Over Sports Wagering Laws

Crypto.com and Novig Sue Missouri Over Sports Betting Contracts

Crypto.com and Novig have taken Missouri to federal court, challenging the state’s effort to classify their sports event contracts as unlicensed gambling. The two platforms filed separate lawsuits on October 16, 2026, in response to cease-and-desist letters issued by the office of Missouri Attorney General Catherine Hanaway. These letters, received between September 16 and 17, presented the companies with a stark ultimatum: cease operations for Missouri residents or obtain the necessary state licenses and pay associated fees and taxes.

Other Platforms Receive Similar Demands

Four other companies—Kalshi, Polymarket, Robinhood, and Underdog—also received identical letters. However, court records indicate that these entities have not yet initiated legal action. As of now, Crypto.com and Novig are the only ones pursuing a judicial resolution to their dispute with the state.

State’s Demands and Financial Implications

Missouri’s demand was straightforward: either stop offering sports event contracts to individuals within the state or secure the required licenses, which would then obligate them to pay state taxes and fees. These financial obligations are substantial. Missouri imposes a 10% tax on the adjusted gross revenue generated from licensed sports betting operations, and application fees can amount to as much as $500,000.

Platforms’ Legal Argument: Derivatives, Not Gambling

Crypto.com and Novig argue that their sports event contracts are a form of financial derivative known as swaps. Swaps fall under the purview of the Commodity Futures Trading Commission (CFTC), the federal agency responsible for regulating futures and options markets. The platforms contend that if their contracts are classified as federally regulated derivatives, then federal law should preempt state gambling regulations.

Missouri’s Stance and Legal Framework

Missouri, however, views these contracts as unlicensed sports betting under its own statutes. The two lawsuits are proceeding in different federal jurisdictions, with Novig filing in the Eastern District of Missouri and Crypto.com in the Western District.

Missouri recently established a legal framework for sports betting. Voters approved Amendment 2 on November 5, 2024, which legalized sports wagering and granted oversight authority to the Missouri Gaming Commission. The regulated market officially launched on December 1, 2025.

Novig, a newer entrant, launched its CFTC-regulated prediction market platform, which focuses exclusively on sports, on August 4, 2026. The company is operated by Ludlow Exchange LLC.

Age Concerns Raised by Attorney General’s Office

In addition to the gambling classification, the Attorney General’s office also raised age concerns regarding five of the six platforms that received letters. Novig was the sole exception to this particular complaint. The issue stems from the platforms’ participation age requirement of 18.

Precedent and Unsettled Regulatory Landscape

The platforms face a challenging legal battle, as federal courts have previously rejected similar arguments for federal preemption in cases involving unlicensed sports betting. This dispute underscores a significant regulatory gap that remains unresolved: federal derivatives regulators and state gambling regulators are examining the same product and arriving at fundamentally different conclusions.

Key developments to watch include early legal motions in both federal courts and whether judges will grant any relief that temporarily halts Missouri’s enforcement actions. It also remains to be seen if any of the four other companies that received cease-and-desist letters will decide to file their own lawsuits.