regulation · prediction markets
Missouri AG Targets Polymarket, Kalshi in Prediction Market Crackdown
Published · Updated
TL;DR
Missouri’s attorney general sent cease-and-desist letters to six prediction market operators, including Polymarket and Kalshi, accusing them of running unlicensed sports betting operations in violation of state law.
Why now
The crackdown comes less than a year after Missouri’s regulated sports betting market launched, as state officials aim to enforce the voter-approved rules and protect tax revenue and consumer safeguards.
Agree / conflict
Prediction market operators claim federal CFTC oversight preempts state gambling laws, while Missouri’s AG argues federal court rulings allow states to regulate event contracts as sports betting.
Takeaway
Missouri residents should only use licensed sports betting platforms, and users of prediction markets should expect potential access restrictions as enforcement unfolds.
Missouri Attorney General Catherine Hanaway has escalated the fight against unlicensed prediction markets by sending cease-and-desist letters to Polymarket, Kalshi, Crypto.com, Novig, Underdog, and Robinhood. The letters demand these platforms stop offering sports event contracts to Missourians, arguing they constitute illegal sports wagering under the state’s new regulatory framework. Hanaway emphasized that Missouri’s system requires operators to be licensed, pay a 10% tax, and enforce strict age verification.
The companies are pushing back, with Robinhood and Polymarket asserting their products are federally regulated by the Commodity Futures Trading Commission. Meanwhile, addiction experts warn that the easy mobile access to prediction markets makes them especially dangerous for young people. Missouri has already collected $11.8 million in sports betting taxes since launching its regulated market, while unlicensed operators pay nothing. The 30-day compliance deadline could lead to legal action if companies refuse to fall in line.
FAQ
What are prediction markets?
Prediction markets allow users to bet on the outcome of future events, including sports games. Platforms like Polymarket and Kalshi let users buy and sell contracts that pay out if a specific outcome occurs.
Why is Missouri targeting these platforms?
Missouri argues that “event contracts” for sports outcomes are essentially unlicensed sports bets. The state’s regulated sports wagering market requires operators to be licensed, pay taxes, and verify age — requirements prediction markets do not follow.
Can prediction markets operate legally under federal law?
The companies claim their contracts are regulated by the Commodity Futures Trading Commission (CFTC) under federal commodities law. However, Missouri’s AG says federal law does not preempt state gambling laws, and courts have sided with states in similar cases.
What happens if the companies don’t comply?
The cease-and-desist letters give 30 days to comply. The AG warns that failure will result in enforcement action, which could include fines or legal proceedings to block operations in Missouri.
How does this affect Missouri residents who use these platforms?
Residents may lose access to these platforms unless they obtain a Missouri gaming license. The crackdown aims to protect consumers and ensure all sports wagering follows state regulations, including age restrictions and oversight.
Sources
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