Missouri AG takes aim at prediction market platforms

• Missouri AG has sent letters to six prediction market companies in the state
• The AG’s office claims that the companies are offering illegal sports wagering
• The entities now have 30 days to comply or face enforcement action

Missouri’s Attorney General’s Office has taken aim at both Polymarket and Kalshi, among others, America’s leading prediction market platforms, over their offering of event contracts, which the state’s top attorney has characterized as "illegal gambling."

AG’s done with illegal gambling in Missouri

The argument is familiar, and it pits two ideas against each other. On the one side are the prediction market platforms which insist they are federally regulated exchanges and cannot be targeted by states over breaches.

Then again, there is Missouri AG Catherine Hanaway, who has sent cease-and-desist letters to a total of six companies that are offering event contracts, which are considered unlicensed sports wagering, the state’s top prosecutor maintains.

A statement released by Polymarket reinforced the sector’s argument against non-federal oversight:

"Polymarket US maintains that prediction markets are regulated by the Commodity Futures Trading Commission under a federal framework, not a patchwork of state rules."

In a statement announcing the cease-and-desist letters targeting Polymarket, Kalshi, Underdog, Robinhood, Crypto.com and Novig, Hanaway said:

"Missourians voted for a safe, well-regulated sports wagering market that supports public education and addresses problem gambling. Companies cannot repackage sports bets as ‘event contracts’ to avoid Missouri law. We will enforce the rules voters approved and protect consumers."

Federal regulation comes to head with local oversight

Hanaway said that any company that wants to engage in sports betting in the state would have to undergo the obligatory licensing process with the Missouri Gaming Commission. The AG also brought into question the legal age of gambling in the state - 21 - which is not the same as what prediction markets are offering.

Robinhood similarly objected to the AG’s allegations: "Robinhood’s event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner."

Event contracts are available to those who are 18 or older. Hanaway insisted that the Commodity Exchange Act did not apply in the case, as event contracts cannot be qualified as swaps. The companies targeted in the letters now have 30 days to comply under state law or face further enforcement action.

It is possible for prediction market platforms named in the letters to now pursue injunctions against enforcement and engage in a legal fight, as they have all over the U.S.

Missouri is not the only state to have pursued a similar course of action against the sector, with Connecticut filing a lawsuit against Kalshi recently.

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