Novig and Crypto.com Sue Missouri Officials Over Event Contract Enforcement

Two federally regulated derivatives venues have asked federal courts to block Missouri officials from enforcing state gambling laws against their sports event contracts ¹. On Friday, Oct. 16, Ludlow Exchange, operating as Novig, and Crypto.com's North American Derivatives Exchange filed separate complaints against Missouri Attorney General Catherine Hanaway, Missouri Gaming Commission Executive Director Michael A. Leara, and commission Chair Jan Zimmerman ¹. Novig submitted its 42-page filing in the Eastern District of Missouri, while North American Derivatives Exchange filed its 39-page complaint in the Western District of Missouri ¹.

The lawsuits follow cease-and-desist letters sent by Hanaway’s office in September to six prediction market and trading platforms: Novig, Crypto.com, Robinhood, Underdog, Kalshi, and Polymarket ¹. The state ordered the platforms to halt offering sports event contracts to residents without obtaining a license from the Missouri Gaming Commission ¹. Licensed Missouri sportsbooks face a 10% tax on gross receipts and must restrict access to patrons aged 21 and older ¹. On Sept. 18, Hanaway stated publicly that companies cannot evade state statutes by labeling sports bets as event contracts ¹. According to Novig's complaint, the state gave the firm an Oct. 17 compliance deadline, though no state enforcement actions had been formally announced as of Monday, Oct. 19 ¹.

The Federal Preemption Argument

Both exchanges contend that state enforcement is preempted under federal law ¹. Novig argued that the Commodity Exchange Act grants the Commodity Futures Trading Commission exclusive jurisdiction over swaps executed on a designated contract market, noting that the CFTC granted Novig its contract market designation in June ¹. Novig is seeking preliminary and permanent injunctions, requesting that the court maintain the legal status quo while federal appeals courts resolve the issue ¹. The filing highlights Kalshi’s pending appeal in KalshiEX v. Bird before the Eighth Circuit—which covers Missouri—where briefing concludes on Dec. 6 ¹.

North American Derivatives Exchange presented a parallel preemption argument, asserting that the CFTC maintains sole supervisory authority over designated contract markets ¹. A footnote in the exchange's complaint also noted that Missouri officials incorrectly addressed their cease-and-desist notice to Foris DAX, Inc., referring to the entity as Crypto.com, instead of North American Derivatives Exchange ¹. Court dockets indicated no corresponding lawsuits filed in Missouri by Kalshi, Polymarket, Robinhood, or Underdog as of Monday, Oct. 19 ¹.