Key Takeaways
- Missouri’s attorney general counterclaimed against Novig under a 2006 federal anti-gambling law.
- Polymarket U.S. sued AG Catherine Hanaway, citing federal preemption and the Commerce Clause.
- Both got September letters calling their sports contracts unlicensed sports wagering.
Missouri Counterclaims Against Novig Under Federal Law
Missouri Attorney General Catherine Hanaway filed counterclaims against Novig on Nov. 9 in the U.S. District Court for the Eastern District of Missouri, as part of the answer to the lawsuit the company filed in October against her and two Missouri Gaming Commission officials.
The first counterclaim relies on the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which lets a state attorney general sue in federal court to stop “restricted transactions.” Missouri argues that wagers placed with an operator not licensed by the Missouri Gaming Commission are unlawful under state law, which makes them “unlawful Internet gambling” under UIGEA.
It asks the court to bar Novig “from accepting financial instruments from Missouri residents in connection with unlawful Internet gambling.” UIGEA’s definition of a bet or wager may exclude transactions conducted on or subject to the rules of an entity registered under the Commodity Exchange Act, but the counterclaim does not address that potential legal argument.
Hanaway also claims Novig is breaking the Missouri Merchandising Practices Act, seeking restitution and civil penalties of up to $1,000 per violation, and that it runs a public nuisance under Missouri common law. The filing describes Novig as a platform that “offers, accepts, and settles wagers on the outcomes of professional and collegiate sporting events,” and says Novig costs Missouri “an unquantified amount of tax revenue.”
Solicitor General Louis J. Capozzi III signed the filing. Novig, which has been a CFTC-designated contract market since June and has made waves on social media with a racy set of ads featuring Sydney Sweeney, sued Hanaway on Oct. 16 and moved for a preliminary injunction on Nov. 8.
Novig’s suit argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event contracts traded on federally designated exchanges, so Missouri cannot enforce its gambling laws against them. It also says Missouri’s licensing regime is “structurally incompatible” with an exchange, which it says depends on a national pool of buyers and sellers. Missouri has asked the court to merge the case with a similar suit Kalshi filed on Oct. 27.
Polymarket U.S. Says Missouri’s Rules Protect Local Casinos
QCX LLC, which does business as Polymarket U.S., filed its complaint against Hanaway and five Gaming Commission members the same day. It argues that the Commodity Exchange Act preempts Missouri’s sports-wagering laws as applied to its exchange, and that the state’s licensing regime discriminates against out-of-state businesses.
New Missouri sports-wagering licenses are available only through in-state casino boats and sports teams, wager-processing servers must be in Missouri, and bets may be accepted only from people physically in the state, the complaint says. It calls the regime “designed for—and to protect—in-State casinos.”
“The Chicago Mercantile Exchange, for example, is not the MGM Grand, though a customer of either might end up losing money,” the complaint says. It also cites Missouri commodity-law provisions, in place since 1985, that exclude CFTC-designated contract markets, and the CFTC’s Nov. 5 interpretation that exchanges generally may not limit access based on a trader’s location within the U.S.
Polymarket U.S. said it held talks with Hanaway’s office after receiving the letter, but “those discussions were unsuccessful.” It has not yet filed for a preliminary injunction.
Six Operators Received Missouri’s Letters
Hanaway sent cease-and-desist letters in September to Polymarket, Kalshi, Novig, Crypto.com, Underdog, and Robinhood. The letter to Polymarket, dated Sept. 16, called it “an online sports wagering platform” and said it “has kept all of that money for itself.” It also objected that Polymarket’s U.S. rulebook lets 18-year-olds trade, saying sports wagering by Missourians under 21 “will not be tolerated.”
Missouri is just one of several states taking prediction markets to court, with legal developments continuing all around the nation. Arkansas sued Kalshi on Nov. 4 under its deceptive trade practices law, while the CFTC has sued Utah to stop it from enforcing its gambling laws against federally regulated exchanges.
