Prediction Market Lawsuits Grow in Missouri and Arkansas

Robinhood and Polymarket filed separate federal lawsuits against the state of Missouri to block the enforcement of gambling laws against sports event contracts. The companies argue that these products fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), not state gambling regulators.

Robinhood's filing follows a warning issued by a deputy state attorney general on November 6. The warning stated that if compliance was not achieved within three days, a court order would be sought. Polymarket is asking that Missouri's sports betting laws not be applied to its exchange. Underdog filed a similar challenge on Sunday. Crypto.com, Novig and Kalshi had sued earlier, after Attorney General Catherine Hanaway sent cease-and-desist notices to six operators in September.

On Monday, Hanaway went on the offensive as well. She added a counterclaim to Novig's existing lawsuit. The state claims that Novig violated the federal Unlawful Internet Gambling Enforcement Act, the Missouri Merchandising Practices Act and public nuisance law. Missouri wants Novig barred from accepting payments tied to sports betting, ordered to pay restitution, and subjected to civil penalties of up to $1,000 per violation. The state also asks the court to declare that the business constitutes a public nuisance.

In Arkansas, legal conflict also erupted on Monday. Crypto.com's OG.com site and Polymarket filed federal lawsuits against state officials. The two companies cited the state's November 4 lawsuit against Kalshi as evidence of an imminent threat of enforcement against them. They argue that under the Commodity Exchange Act, the CFTC's exclusive jurisdiction overrides state gambling laws.

Arkansas Attorney General Tim Griffin described Kalshi as a "straight-up gambling platform" and a "pocket-sized betting broker." The state alleges that Kalshi operates an illegal gambling platform and violates consumer protection laws.

Meanwhile, tribes have also become parties in the legal fight in New York. On Monday, 27 federally recognized tribes, along with 13 tribal organizations and entities, submitted an amicus brief to the Second Circuit supporting New York regulators. The brief sides with New York regulators in their dispute with Kalshi.