Novig and Crypto.com Take Missouri to Federal Court

Two prediction market exchanges have taken Missouri to court over sports event contracts. On Friday, Oct. 16, Novig, which operates through Ludlow Exchange LLC, sued Attorney General Catherine Hanaway and Missouri Gaming Commission officials in the U.S. District Court for the Eastern District of Missouri. Crypto.com's exchange, North American Derivatives Exchange, filed a separate suit in the Western District. Novig argues its contracts are swaps under the Commodity Exchange Act, so federal law preempts Missouri's gambling rules, SBC Americas reported. Crypto.com's exchange makes the same core argument, Unchained reported.

The suits answer cease-and-desist letters that Hanaway's office announced on Sept. 18. "Companies cannot repackage sports bets as 'event contracts' to avoid Missouri law," Hanaway said. Novig's letter, dated Sept. 17, told the company the state's licensing requirement "is not optional and applies to Novig," and gave it 30 days to stop offering sports wagering in Missouri or obtain a license. That deadline fell on Oct. 17, one day after the filing.

Six companies received letters: Kalshi, Polymarket, Crypto.com, Novig, Underdog and Robinhood. Missouri voters approved sports betting in 2024, and the market launched on Dec. 1, 2025, with a 10% tax on gross receipts and a minimum age of 21. The state says five of the six either allow underage users or lack adequate safeguards. Novig argues that a license would require geofencing in Missouri and the 10% tax, fragmenting national liquidity. Crypto.com says no license is available, because Missouri's constitution allows two untethered mobile sports betting licenses and both are taken. Covers, citing gaming attorney Daniel Wallach, reported that the suits were filed in separate districts so they would not land before the same judge.

For those keeping score at home, the courts are split. The Third Circuit sided with Kalshi, while the Sixth and Ninth Circuits sided with states, Semafor noted on Friday. New Jersey has asked the Supreme Court to resolve the split, with briefs urging review from 39 states and the District of Columbia, 145 tribes, the NFL and the American Gaming Association. Kalshi's response is due Nov. 9, SBC Americas reported. Missouri sits in the Eighth Circuit, where Kalshi's appeal in its case against Iowa officials is pending, with briefing set to run through Dec. 6. As of Oct. 19, Kalshi, Polymarket, Robinhood and Underdog had not sued in Missouri, Unchained reported.

No enforcement action against either exchange had been announced as of Oct. 19, Unchained reported, and Novig is seeking preliminary and permanent injunctions. A first ruling could show how Missouri's federal judges read the swap argument before the Eighth Circuit weighs in.

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Old Rulebooks, New Markets

Three stories this week shared one gap. Novig argues Missouri's licensing regime assumes a house on the other side of every bet. The NBA's new betting limits went to sportsbook partners, not prediction market operators. A Wall Street Journal report found most of one platform's volume came from accounts trading with each other. Old frameworks are meeting a new product.

Activity: Novig and Crypto.com sued Missouri on Oct. 16. The NBA told sportsbook partners to drop certain bets, with rules that do not reach prediction market operators, and Covers reported a first $11 billion weekend of prediction market volume.

Drivers: Licensing regimes and league agreements were written for sportsbooks, which take the other side of the bet. Novig's complaint says a licensing regime "calibrated to the economics of the house does not readily accommodate a market with no house," SBC Americas reported. The NBA's sportsbook agreements do not extend to prediction market operators, Legal Sports Report noted.

Insight: The gap cuts both ways. Exchanges can argue that old rules do not fit them, while states and leagues can answer that the new products sit outside the safeguards they negotiated. Volume is a third gap: records count notional dollars, and the Journal's findings on ADI Predictstreet are a reminder that totals can include accounts trading almost exclusively with each other.

Our Take: Prediction markets are growing faster than the rules built around them. That helps in court, where Novig can say a licensing model designed for a house was never meant for an exchange. It hurts everywhere else, where leagues and states are still writing for sportsbooks. Records may keep coming. Whether anyone trusts the numbers is a separate question. A market does not escape its rulebook by outgrowing it. Someone still has to write the next one.

News to Know

The Wall Street Journal reports roughly $108 million of FIFA partner ADI Predictstreet's $167 million in volume through late September came from accounts trading almost exclusively with each other. Legal Sports Report has the details.

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Missouri's fight is a reminder that the industry's biggest questions are now being asked in courtrooms, not comment periods. Two exchanges asked federal judges to shield them from Missouri enforcement, while a league memo and a record weekend showed how much of the surrounding machinery was built for something else.

The cases are days old, and the Supreme Court has yet to say whether it will hear New Jersey's petition. Expect more filings like these. The rulebook is still being written.