Missouri Sports Event Contracts Face Federal Preemption Challenge from Two CFTC-Regulated Operators
North American Derivatives Exchange and Ludlow Exchange sued Missouri on October 16, arguing CFTC-regulated sports event contracts are exempt from the state’s 21+ age rule and 10% tax. The cases seek injunctions and cite split circuit precedent plus a pending Eighth Circuit Kalshi appeal. Four other targeted firms have not yet filed suit.
SCCG Take — The Eighth Circuit outcome will set precedent for prediction market expansion. Operators must weigh compliance costs against litigation risks until federal preemption is clarified.
Two prediction market operators have filed federal lawsuits seeking to block Missouri from applying its sports wagering rules to their event contracts. North American Derivatives Exchange, which runs Crypto.com’s OG platform, and Ludlow Exchange, operator of Novig, filed the suits on October 16 after a 30-day compliance window expired. The operators argue that Commodity Exchange Act oversight by the CFTC places their products outside state licensing, the 21-year minimum age, and the 10% tax on gross receipts.
Missouri treats the contracts offered to residents as sports wagering that requires state authorization. Attorney General Catherine Hanaway’s office issued cease-and-desist notices on September 16 and 17, announced the action on September 18, and maintained that describing bets as event contracts does not remove them from state law. The office also alleged that five of six targeted firms had inadequate underage safeguards, though Novig was not included in that claim.
Basis of the Separate Federal Filings
North American Derivatives Exchange sued in the U.S. District Court for the Western District of Missouri, requesting a declaration of federal governance and a permanent injunction. Its complaint notes the notice went to Foris DAX, Inc. rather than the exchange itself and argues state licensing is impractical because Missouri’s constitution limits direct mobile sports wagering licenses to two, both already issued. Ludlow Exchange filed in the U.S. District Court for the Eastern District of Missouri as Ludlow Exchange, LLC v. Hanaway et al., naming Michael Lear and Jan Zimmerman alongside Hanaway. It seeks preliminary and permanent injunctions, citing a pending Kalshi appeal in the U.S. Court of Appeals for the Eighth Circuit as grounds to pause enforcement.
The Unsettled Federal-State Jurisdiction Line
The Eighth Circuit is weighing the same core question in related Iowa litigation involving Kalshi, which Novig cites in its request for preliminary relief. The Sixth and Ninth Circuits have ruled against Kalshi’s position in parallel cases, while the Third Circuit has sided with the company. Ludlow Exchange received CFTC-designated contract market status on June 16; the OG platform launched in February 2026. As reported by Casino Beats, four other notice recipients—Kalshi, Polymarket, Robinhood, and Underdog—had not sued in Missouri federal court as of the latest docket review.
Until the Eighth Circuit rules and the district courts act on the injunction requests, operators face an unresolved boundary between federal derivatives authority and state sports wagering enforcement. The next developments will determine whether prediction market products can scale in Missouri and similar jurisdictions without satisfying dual regulatory demands.
Reporting: Casino Beats
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
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