Crypto.com and Novig have taken Missouri to federal court, fighting the state's attempt to treat their sports event contracts as unlicensed gambling.

Sports event contracts pay out based on the outcome of a game, and they are the core product of prediction markets — platforms where users trade on the results of real-world events. Whether those contracts are financial instruments or wagers is the question now sitting before a federal judge.

The two platforms filed separate lawsuits on October 16, 2026, in response to cease-and-desist letters from the office of Missouri Attorney General Catherine Hanaway. The letters arrived between September 16 and 17 and gave the companies a blunt choice: stop serving Missouri residents, or get licensed and pay up.

Four other companies received the same letters. Kalshi, Polymarket, Robinhood, and Underdog have not sued, according to court records. For now, Crypto.com and Novig are the only recipients willing to argue their case before a judge.

What Missouri Wants, and What the Platforms Say Back

The demand was simple. Either stop offering sports event contracts to people in Missouri, or obtain the required state licenses and pay the taxes and fees that come with them.

Those costs are real. Missouri levies a 10% tax on adjusted gross revenue from licensed sports betting, and application fees can reach $500,000.

Crypto.com and Novig contend that their sports event contracts are swaps, a type of financial derivative. Swaps fall under the Commodity Futures Trading Commission (CFTC), the federal agency that oversees futures and options markets. If the contracts are federally regulated derivatives, the platforms argue, federal law preempts state gambling rules — the doctrine that federal law overrides conflicting state law.

Missouri considers the same contracts unlicensed sports betting under its own law. The two suits are moving through different courts: Novig filed in the Eastern District of Missouri, while Crypto.com filed in the Western District.

Missouri's Sports Betting Market Is Still New

The state only recently built a legal sports betting framework. Voters approved Amendment 2 on November 5, 2024, which legalized sports wagering and put the Missouri Gaming Commission in charge of oversight. The regulated market launched on December 1, 2025.

Novig is newer still. The company, operated by Ludlow Exchange LLC, launched its CFTC-regulated prediction market platform on August 4, 2026, and focuses exclusively on sports — a debut that came roughly six weeks before the cease-and-desist letters arrived.

The Attorney General's office also flagged age concerns for five of the six platforms. Novig was the only one left out of that particular complaint. The issue centers on a participation age of 18.

The Legal Odds and What to Watch

The platforms face an uphill climb on precedent. Federal courts have previously rejected similar federal preemption claims in disputes over unlicensed sports betting.

Either way, the dispute highlights a gap that has not been settled. Federal derivatives regulators and state gambling regulators are looking at the same product and seeing two different things. Which view prevails will decide how platforms can serve Missouri residents: under federal regulation alone, or through the state's licensing system.

The next signals to watch are early motions in the two federal courts, and whether either judge grants relief that pauses Missouri's enforcement. Watch, too, whether any of the four remaining platforms decides to file.