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Underdog sues Missouri over threatened prediction-market enforcement

Regulation1 min read

Underdog sued Missouri in federal court on 8 November, seeking an injunction against enforcement action over its sports prediction markets. The company says the attorney general’s office warned on 6 November that action would begin within three days; its suit cites earlier compliance deadlines of 17 October and 30 October.

Underdog sued Missouri on 8 November and is seeking a preliminary injunction to block state enforcement, according to the lawsuit. The case was filed in the U.S. District Court for the Western District of Missouri, where the company argues that further efforts to close sports prediction markets could seriously harm its business.

The lawsuit alleges that Hanaway’s office informed Underdog on 6 November that the state planned unspecified enforcement measures within three days. Underdog says such action could bring civil penalties or criminal liability, force it to cease Missouri operations and have serious repercussions for its business nationwide.

Hanaway's office sent letters to operators in September telling companies including Underdog to stop sports wagering in Missouri or obtain a Missouri Gaming Commission licence, the lawsuit says. Underdog's initial deadline to comply was 17 October, later extended to 30 October. Hanaway's office had not responded to a request for comment at the time of publication.

Underdog introduced its prediction market platform in 38 states in July and has since expanded to 46 states, relinquishing sports betting and daily fantasy sports licences in some jurisdictions. Crypto.com, Kalshi, Novig, Robinhood and Polymarket received cease-and-desist letters from Missouri, with Crypto.com, Kalshi and Novig suing Hanaway's office in response. Underdog is set to be sold to IG Group for $1.3bn.

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Two prediction-market operators sue Missouri over sports event contract rules

North American Derivatives Exchange, which operates Crypto.com's OG prediction market, and Ludlow Exchange, Novig's operator, filed separate lawsuits on 16 October challenging Missouri's 21-year age minimum and 10% tax on sports event contracts. Both argue that federal commodities law gives the CFTC authority over their contracts, pre-empting state gambling rules, after a 30-day compliance period following cease-and-desist notices expired. Missouri Attorney General Catherine Hanaway's office maintains that labelling a sports bet an event contract does not remove it from state law.

North American Derivatives Exchange, which operates Crypto.com's OG prediction-market platform, and Ludlow Exchange, the operator behind Novig, filed separate lawsuits on 16 October challenging Missouri's sports event contract rules. The filings followed the expiry of a 30-day compliance period set out in cease-and-desist notices. Both companies argue that federal commodities law gives the Commodity Futures Trading Commission authority over their contracts, putting them outside Missouri's gambling requirements.

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