Kalshi sues Missouri over sports-event contract crackdown

Kalshi has sued Missouri in federal court to block enforcement of the state’s sports-wagering laws against the prediction-market operator, escalating a dispute that began with a September cease-and-desist letter from Attorney General Catherine Hanaway.

KalshiEX LLC argues that its sports-event contracts trade on a federally designated contract market and fall under the Commodity Futures Trading Commission’s exclusive authority. Its complaint seeks declaratory and injunctive relief against Missouri officials and the Missouri Gaming Commission, contending that state enforcement violates the Constitution’s Supremacy Clause.

The company says Missouri’s demands intrude on exchange-traded derivatives, a field Congress reserved to the federal government. It argues that withdrawing its contracts from Missouri could breach CFTC impartial-access and market-disruption requirements, while compliance with state law could expose it to criminal prosecution, civil forfeiture, abatement suits and administrative penalties.

The state’s Sept. 16 letter described Kalshi as an unlicensed online sports-wagering platform. It required the company either to stop offering sports-event contracts in Missouri or comply with licensing, tax, fee and age restrictions. Missouri extended an initial Oct. 16 deadline to Oct. 30, and the solicitor general told Kalshi on Oct. 27 that the state could not agree to withhold enforcement.

Missouri’s sports-betting regime includes a 10% wagering tax, an under-21 restriction and fines of up to $50,000 per violation, or $100,000 for violations arising from the same occurrence. Kalshi says obtaining a licence is not realistically possible: direct mobile licences are limited to two, both held by Circa Sports and DraftKings, while retail licences are reserved for casinos, professional sports teams and their commercial partners.

Hanaway maintains that event contracts facilitating sports wagers are subject to the same state rules as casino or sportsbook bets. Her office said it would enforce Missouri law and was confident that courts would not stop it. The attorney general issued similar cease-and-desist letters to Polymarket, Crypto.com, Novig, Underdog and Robinhood, alleging that some operators either allowed underage access or lacked sufficient protections against it.

Kalshi counters that it is a peer-to-peer exchange rather than a bookmaker: users holding opposing views on an outcome are matched, and the company says it does not profit when a participant loses. Missouri voters approved Amendment 2 in 2024, placing sports-betting oversight with the Gaming Commission, and the regulated market opened on Dec. 1, 2025.

As reported last week, Kalshi had already brought a similar pre-emptive challenge against Louisiana officials over enforcement of that state’s gambling laws.

The Missouri suit enters a legal landscape divided over federal pre-emption. The Third Circuit held in April that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over trades on designated contract markets and affirmed a preliminary injunction preventing New Jersey from applying its gambling laws to Kalshi’s sports contracts. The Sixth Circuit reached the opposite conclusion in a case involving Ohio and Tennessee, holding that the contracts were not swaps and that federal law did not pre-empt those states’ gambling laws. A federal court in Illinois has meanwhile preliminarily barred state enforcement against Kalshi.

The disagreement has expanded beyond Kalshi. The CFTC sued Arizona, Connecticut and Illinois in April, alleging that their application of gambling laws to designated-market event contracts was pre-empted, while private prediction-market participants had brought related suits in 11 states.