Novig and Crypto.com’s U.S. derivatives exchange have asked federal judges to stop Missouri from treating their sports event contracts as illegal, unlicensed betting.
Both suits were filed on Friday, Oct. 16, in separate federal districts. Ludlow Exchange, which operates as Novig, filed a 42-page complaint in the Eastern District of Missouri against Attorney General Catherine Hanaway, Missouri Gaming Commission Executive Director Michael A. Leara and commission Chair Jan Zimmerman. North American Derivatives Exchange, the Crypto.com-owned exchange, sued in the Western District, naming Hanaway and members of the gaming commission.
Get Unchained’s crypto news in your inbox with the free Unchained Daily newsletter.
The September Letters
In September, Hanaway’s office sent cease-and-desist letters to Robinhood, Underdog, Novig, Crypto.com, Kalshi and Polymarket. It told them to stop offering sports event contracts to Missourians unless they obtain a Missouri Gaming Commission license. Licensed sportsbooks in the state pay a 10% tax on gross receipts and must keep out anyone under 21.
“Companies cannot repackage sports bets as ‘event contracts’ to evade Missouri law,” Hanaway wrote on X on Sept. 18.
According to Novig’s complaint, the letter from Hanaway’s office gave the company until Oct. 17 to comply. No enforcement action against either exchange had been announced as of Monday.
The Preemption Argument
Novig argues that the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive jurisdiction over swaps traded on a federally designated contract market, and that its event contracts are swaps. The CFTC granted Novig that designation in June, the filing says. The company wants a declaration that Missouri’s gambling laws are preempted as applied to its exchange, along with preliminary and permanent injunctions.
An early injunction would “hold the parties’ legal positions in place pending resolution of a question on which courts have divided,” the complaint states. It points to Kalshi’s pending appeal in KalshiEX v. Bird at the Eighth Circuit, which covers Missouri, where briefing is set to wrap up on Dec. 6.
North American Derivatives Exchange makes the same core argument in its own 39-page complaint, saying Congress gave the CFTC “exclusive jurisdiction” over trading on federally designated contract markets and that any enforcement by Missouri would be preempted. A footnote says the attorney general’s office “incorrectly addressed” its cease-and-desist letter to Foris DAX, Inc., which the letter called Crypto.com, rather than to North American Derivatives Exchange.
Federal court records in Missouri showed no suits from Kalshi, Polymarket, Robinhood or Underdog as of Monday.
Related Listen: The Chopping Block: Has Crypto Lost Its Soul? Cypherpunk Nostalgia, Prediction Markets, & Permissionless Perps
