On October 19, 2026, Unchained reported that two federally regulated exchanges filed lawsuits on Friday, October 16, asking federal courts to stop Missouri from treating their sports event contracts as illegal, unlicensed betting. Ludlow Exchange, which operates as Novig, filed a 42-page complaint in the Eastern District of Missouri; the Crypto.com-owned North American Derivatives Exchange filed a 39-page complaint in the Western District.

The suits respond to cease-and-desist letters that Missouri Attorney General Catherine Hanaway sent to six prediction-market operators, including Novig and Crypto.com, according to the Attorney General's press release. North American Derivatives Exchange says the Crypto.com letter was addressed to a different entity, Foris DAX, Inc., per its complaint. Missouri's position is that sports event contracts are unlicensed sports wagering: "Companies cannot repackage sports bets as 'event contracts' to avoid Missouri law," Hanaway said, adding that any company offering sports wagering in the state must be licensed by the Missouri Gaming Commission and keep out anyone under 21. Licensed operators also owe a 10% tax on adjusted gross revenue (receipts minus winnings and other listed deductions) under Article III, Section 39(g) of the Missouri Constitution. According to Novig's complaint, the letter it received was dated September 17 and gave it until October 17 to comply.

Why It Matters

The legal question is federal preemption, and both complaints turn on the same argument. The Novig complaint contends that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps traded on a federally designated contract market, and that its event contracts are swaps — instruments whose payment depends on the occurrence or nonoccurrence of an event. The CFTC designated Novig as a designated contract market on June 16, 2026, according to the CFTC's designation record. If event contracts are swaps on a federally regulated exchange, the complaint argues, Missouri's gambling laws cannot apply to them. Missouri disagrees, and its press release asserts that federal law does not preempt state law in this area.

What makes this more than a licensing dispute is how each side defines the same product. Novig's complaint describes its trading model as non-intermediated — contracts trade on an anonymous electronic central limit order book, cleared on a fully collateralized basis, with age-gated participants and self-exclusion tools — presenting event contracts as regulated derivatives infrastructure. Missouri describes the identical activity as sports betting offered without a state license, pointing to the voter-approved Amendment 2 framework that legalized sports wagering under the Gaming Commission. The case turns on two linked legal questions: how these contracts are classified under federal law, and whether that federal law preempts Missouri's sports-wagering requirements. The answers decide which rulebook traders operate under.

The Novig complaint points to a related appeal, KalshiEX v. Bird, pending at the Eighth Circuit, the federal appeals court that covers Missouri. The complaint says briefing there is set to conclude on December 6, 2026, but the court's briefing order fixes only the opening brief, due November 6, 2026; the response and reply briefs are due 30 and 21 days, respectively, after the court issues notice that the preceding brief has been filed, and no ruling date is set. As of October 19, the other four operators that received letters had not filed their own suits in Missouri's federal districts, per Unchained. For derivatives traders, the case is worth following because the dispute illustrates how jurisdiction can affect market access, applicable protections, and regulatory oversight.

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