Kalshi has responded to Missouri’s order targeting prediction-market companies offering contracts tied to sports outcomes, becoming the first of six firms the state named to engage with the attorney general’s office. Missouri Attorney General Catherine Hanaway argues that these contracts amount to unlicensed sports wagering, while Kalshi maintains that its products are federally regulated financial contracts rather than traditional sports bets.
The Missouri attorney general’s office said it is now in ongoing discussions with Kalshi and has not ruled out further action. The dispute highlights a broader question facing prediction markets across the U.S.: whether states can apply their gambling laws to sports event contracts or whether federal commodities law gives the Commodity Futures Trading Commission primary authority.
Missouri Orders Prediction Markets to Stop Offering Sports Contracts
Missouri’s action began in September, when Attorney General Catherine Hanaway sent cease-and-desist letters to six prediction-market operators: Kalshi, Polymarket, Crypto.com, Novig, Underdog and Robinhood. The Missouri Attorney General’s announcement said the companies were offering sports “event contracts” that constitute unlicensed sports wagering under state law.
Missouri legalized sports betting after voters approved Amendment 2 in 2024. The Missouri Gaming Commission oversees the system, and licensed operators must meet state requirements, including taxes and age verification. The AG’s office said sports wagers must be limited to people aged 21 and older.
Hanaway’s office has argued that companies cannot avoid Missouri’s gambling rules simply by describing sports-related products as “event contracts.” The state has given the companies a period to comply with Missouri law or stop offering the relevant contracts, with further enforcement possible. The action comes as several states examine whether prediction markets should be treated differently from traditional sportsbooks. The distinction is important because prediction-market operators generally operate under federal commodities regulation, while sportsbooks offering sports bets are regulated at the state level.
Kalshi has now responded to the order. The Missouri attorney general’s office told Spectrum News that it is in “ongoing discussions” with the company.
Kalshi’s position differs from Missouri’s. The company argues that its event contracts fall under the federal commodities framework and should not be treated as ordinary sports wagers subject to individual state licensing systems. The company also distinguishes its platform from a conventional sportsbook. Kalshi’s head of research, Nicole Kagan, told Spectrum that the platform does not set traditional sportsbook odds or take the other side of customers’ trades. Instead, participants determine prices by trading contracts against one another.
Federal And State Rules Remain At The Center Of The Dispute
The disagreement comes down largely to which regulatory framework applies. Prediction-market operators argue that their contracts are financial products regulated by the CFTC, while state officials such as Hanaway argue that contracts based on sporting events can still fall under state gambling laws.
A recent federal appeals court decision has added another piece to the debate. In September, the Sixth Circuit Court of Appeals ruled in a case involving Kalshi that federal commodities law did not prevent Ohio and other states involved from applying their sports-betting laws to the contracts at issue.
The court considered whether the federal regulatory framework preempted state restrictions on sports-related contracts. The decision does not resolve the issue nationwide. Other courts have considered similar disputes involving prediction markets, leaving the companies and state regulators with different interpretations of how federal and state authority should interact.
The debate has also appeared in online prediction-market communities. Discussions on Reddit include users comparing how sports contracts are treated across different states and discussing the effect of state restrictions on access to prediction markets. These discussions are user commentary rather than legal authority, but they provide context for how participants are experiencing the regulatory dispute.
Missouri’s immediate position remains that companies offering sports contracts to residents must follow the state’s sports-wagering rules. Kalshi, meanwhile, continues to argue that its contracts belong under federal oversight.
