Missouri Orders Six Prediction Markets to Stop Offering Sports Contracts: What the Cease-and-Desist Letters Mean

On September 18, 2026, Missouri Attorney General Catherine Hanaway sent cease-and-desist letters to six prediction-market companies, saying their sports “event contracts” are unlicensed sports wagering. The companies say federal commodities law governs them instead. Here is what the letters say, where the federal courts stand, and what it means for Missourians who use these apps.

Missouri has had legal, regulated sports betting since December 1, 2025. Voters approved it as Amendment 2 in November 2024, and it now lives in the Missouri Constitution at Article III, Section 39(g). Alongside that licensed market, a second kind of product has grown quickly: prediction markets, where users buy and sell contracts that pay out based on whether an event happens, including the outcome of a ballgame.

The legal question is whether those sports contracts are financial instruments regulated by the federal Commodity Futures Trading Commission (CFTC), or sports bets that must be licensed by the Missouri Gaming Commission. The Attorney General’s September 18 announcement takes the second view. The companies take the first. Federal appeals courts are divided, and the answer affects consumers, businesses that promote these products, and anyone under 21 who has an account.

What the Attorney General’s letters say

According to the Attorney General’s release, the letters direct each company to stop offering sports event contracts to Missourians and to obtain a license from the Missouri Gaming Commission if it wishes to offer sports wagering in the state. The release states that federal courts have held online sports wagering platforms are subject to state gambling laws and that sports event contracts do not qualify as “swaps” under the federal Commodity Exchange Act.

The release also alleges that five of the six companies (Polymarket, Kalshi, Crypto.com, Underdog, and Robinhood) either permit users under 21 or lack adequate safeguards to keep Missourians under 21 from trading on sports outcomes. Attorney General Hanaway summarized the office’s position this way:

“Companies cannot repackage sports bets as ‘event contracts’ to avoid Missouri law.”
Missouri Attorney General Catherine Hanaway, September 18, 2026

The companies disagree. In statements reported by KCTV5, Robinhood said its event contracts are federally regulated by the CFTC and offered through a CFTC-registered entity, and Polymarket said prediction markets are regulated under a federal framework rather than “a patchwork of state rules.” A cease-and-desist letter is a demand, not a court order. Whether Missouri can enforce it against a federally registered exchange is the question a court would ultimately decide.

What Missouri’s constitution requires for sports wagering

Because Amendment 2 was a constitutional amendment, Missouri’s sports wagering rules are found in the constitution itself rather than in a chapter of the Revised Statutes. Reading the codified text of Article III, Section 39(g), several provisions bear directly on this dispute.

The State’s argument, in short, is that a contract paying out on the result of a Chiefs or Cardinals game fits that definition, and that an unlicensed company offering it to Missourians is operating outside the framework voters approved. Local coverage by KFVS12 reports that the licensed market generated $11.8 million in state tax revenue in its first eight months, a figure that helps explain why the State is focused on unlicensed competitors.

Where the federal courts stand

The companies’ main defense is federal preemption: the argument that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over contracts traded on a federally designated exchange, which would displace state gambling law. Two federal appeals courts have now ruled on that argument in preliminary-injunction appeals brought by Kalshi, and they reached opposite results.

The Third Circuit majority reasoned that the Act grants the CFTC exclusive jurisdiction over swaps traded on a designated contract market, and that allowing each state to prohibit those contracts would create the kind of state-by-state patchwork Congress sought to avoid. The Ninth Circuit reasoned that the statutory term “event” does not reasonably reach the outcome of a sporting contest, and that a broader reading would, in its view, transfer gambling regulation from the states to a federal commodities regulator without a clear statement from Congress. The Ninth Circuit opinion discusses Flaherty at length and expressly declines to follow it.

Missouri sits in the Eighth Circuit, so neither decision binds federal courts here. Both rulings arose at the preliminary-injunction stage, meaning the courts assessed which side was likely to win rather than issuing final judgments. A division between federal circuits on a question of this kind is often a signal that the Supreme Court of the United States may eventually take it up, though whether and when that happens is uncertain.

The federal regulator is also moving. On June 10, 2026, the CFTC proposed a rule establishing a framework for reviewing event contracts, including those that reference sporting events, to determine whether they involve enumerated activities such as gaming and whether they are contrary to the public interest. A final rule could shape how courts view the question, but a proposed rule is not yet binding law.

What this means for Missourians who use these apps

The letters are directed at the companies, not at their customers. The Attorney General’s release does not announce any action against individual users. Even so, Missourians with accounts should understand the practical consequences if a platform decides to comply, or if a court eventually sides with the State.

If a platform mishandles customer funds, fails to honor a withdrawal, or misrepresents its terms, Missouri’s consumer protection law may be relevant. The Missouri Merchandising Practices Act (MMPA), at section 407.020 RSMo, declares unlawful any “deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce” in or from Missouri. Whether a particular prediction-market dispute falls within the MMPA depends on the facts, and consumers may also file a complaint with the Attorney General’s Consumer Protection Division.

Missouri’s general gambling statute, section 572.020 RSMo, makes knowingly engaging in gambling a class C misdemeanor in most cases. The current dispute centers on whether these contracts are gambling under state law at all, and on whether federal law displaces that question. Anyone who receives a notice, subpoena, or inquiry related to these platforms should speak with a criminal defense attorney before responding.

What it means for Missouri businesses

The dispute reaches beyond the six named companies. Missouri bars, restaurants, sports-related businesses, marketing affiliates, and content creators sometimes partner with prediction-market platforms for promotions or referral fees. Section 39(g) requires licensed operators to keep sports wagering advertising from targeting minors or misleading consumers, and the Attorney General has now taken the position that these platforms are offering unlicensed wagering in Missouri. A business that promotes an unlicensed product in Missouri may face questions it would not face when partnering with a licensed sportsbook.

Businesses considering or holding such a partnership should review their contracts for termination rights, indemnification, and compliance-with-law clauses, and should keep an eye on how the platforms respond to the 30-day deadline. The firm’s business law practice reviews commercial agreements of this kind, and its technology and AI law practice follows how online platforms handle age verification, user data, and regulatory compliance.

What to watch next

Three developments will likely shape what happens in Missouri. The first is how each company responds before the reported mid-October deadline: some may geofence Missouri, some may seek a Gaming Commission license, and some may go to federal court seeking an injunction, as Kalshi has done in other states. The second is whether the Eighth Circuit or the Supreme Court addresses the preemption question. The third is the CFTC’s final action on its June 2026 proposed rule. The firm will continue to follow the matter and report on significant changes.

This article is for educational purposes only and is not legal or tax advice. Reading it does not create an attorney-client relationship with Haake Law Group PC or Derek R. Haake. Laws, regulations, and court decisions change, and this area of law is actively being litigated. Verify current rules with the Missouri Gaming Commission or the relevant agency, and consult an attorney about your specific situation.