Missouri Issues Cease-and-Desist Orders to Polymarket and Kalshi

Missouri Challenges Event Contracts Over Sports Wagering Compliance

Missouri authorities have moved to rein in event market platforms, issuing formal letters ordering operators to halt sports-based offerings within the state. In the communications dispatched to these companies, Hanaway asserted that operators have actively attempted to sidestep state-level sports gambling frameworks across the country. According to the state, the platforms justify their operations by asserting that they offer “event contracts”—or so-called “swaps”—governed by the Commodity Exchange Act (CEA) and subject to exclusive regulation by the Commodity Futures Trading Commission (CFTC).

State officials directly reject this legal characterization, citing multiple federal court rulings that have determined these types of wagers do not meet the legal criteria for “swaps” and therefore fall outside exclusive CFTC oversight. Beyond jurisdictional boundaries, Missouri’s letters emphasize that operators’ noncompliance has inflicted direct economic harm on the state. By avoiding the state’s gambling regime, the platforms have evaded standard operator license fees as well as the statutory 10% wagering tax levied against the adjusted gross revenue generated by in-state sports wagering operations.

Enforcement Timeline and Consumer Protection Concerns

Firmly setting an enforcement boundary, state authorities have warned prediction market platforms that they have exactly 30 days to cease offering sports-oriented event contracts in Missouri or face formal enforcement proceedings. State leadership underscored that voters established specific regulatory safeguards designed to fund public priorities while monitoring gambling risks.

“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,” said Hanaway.

Why This Matters: The Battle Between States and Federal Regulators

Missouri’s crackdown marks the latest flashpoint in an escalating nationwide conflict over whether sports event markets constitute traditional gambling or federally regulated financial derivatives. State gaming regulators increasingly view prediction products as unregulated sports betting that undermines local licensing requirements, tax revenue streams, and consumer safeguards.

The debate has already reached the highest judicial level. On September 2, New Jersey directed a petition to the Supreme Court to determine whether federal law preempts states “from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission.”

Despite mounting challenges from state attorneys and regulators, the federal regulatory body has defended its domain over derivative products. The CFTC maintains that it holds singular authority over these financial instruments. “To any state that seeks to nullify federal law and seize authority over these markets, I say again: We will see you in court,” said Chairman Michael S. Selig in April.

Frequently Asked Questions

Why is Missouri demanding prediction platforms halt sports event contracts?

Missouri claims these platforms are operating unlicensed sports wagering operations. By labeling bets as event contracts or swaps, the companies have avoided acquiring state licenses and paying the required 10% tax on adjusted gross revenue that supports state education and problem gambling programs.

What is the regulatory disagreement between the states and the CFTC?

Prediction markets and the CFTC argue that event contracts are financial swaps governed exclusively at the federal level under the Commodity Exchange Act. Conversely, states argue that sports-based contracts function as sports gambling, pointing to federal court decisions finding these wagers do not qualify as swaps and remain subject to state gambling laws.

How much time do event market operators have to respond to Missouri?

Operators have been issued a 30-day deadline to discontinue offering sports-based event contracts within Missouri. Failure to comply within this window will expose the platforms to state enforcement actions.