The prediction market battle is moving into another state, and this time Missouri is putting multiple major operators to the test.
Missouri Attorney General Catherine Hanaway has issued cease-and-desist letters to six companies offering sports event contracts to residents, arguing that the products amount to unlicensed sports wagering under Missouri law. The companies targeted are Kalshi, Polymarket, Crypto.com, Novig, Underdog, and Robinhood.
This is the latest example of state officials pushing back against the expansion of prediction markets, and Missouri's position could spark another significant legal fight for an industry already facing challenges across the country.
Missouri Taking Stand on Prediction Markets
Missouri only recently entered the legal sports betting market after voters approved Amendment 2 in November of 2024. Sports wagering officially launched in the state on December 1, 2025, with the Missouri Gaming Commission overseeing the market.
Under the state's system, sports betting operators must be licensed and pay taxes on their activity. Sports betting revenue is subject to a 10% tax, with the state's framework also including age and consumer protection requirements.
Hanaway argues that prediction market operators should not be able to offer essentially the same activity without following those rules. The state wants its taxes, and prediction markets like Kalshi don’t want to pay.
Hanaway’s office says calling sports wagers "event contracts" does not change their underlying nature. From the state's perspective, consumers are still putting money behind the outcome of sporting events, making the products subject to Missouri's gambling laws.
The biggest difference not being noted is that prediction markets are essentially “peer-to-peer.” Nevertheless, the state doesn’t see a significant difference.
The Usual Fight
Kalshi and other prediction markets have maintained that their contracts are financial products regulated federally through the Commodity Futures Trading Commission rather than sports bets controlled by individual states.
That distinction is at the heart of the legal conflict. Prediction markets operate differently from traditional sportsbooks in how they are structured and traded. Instead of simply placing a wager against a sportsbook, users buy and sell contracts tied to a particular outcome.
Yet, state regulators have increasingly argued that the technical structure should not determine whether a sports-related contract is treated as gambling.
Missouri is now joining a growing list of states trying to draw that line so they can capitalize on tax revenue.
Traditional sportsbooks operating in Missouri must participate in the state's regulated system and pay taxes. If prediction markets can offer similar sports products without falling under that framework, state officials know they’re losing tax revenue.
Missouri's sports betting market is still relatively young, so the state doesn’t have years of historical data to determine exactly how much activity could migrate from sportsbooks to prediction markets. Prediction markets are very popular in non-sports betting states, but they’re trying to make a splash everywhere.
The Trade Handle Prediction Markets Take
The Missouri AG's office has indicated that it would prefer to reach an agreement with the companies, but litigation remains a possibility if the operators don’t comply. Based on what has happened elsewhere, they won't comply.
Hanaway has also raised concerns about consumer protections and age verification, arguing that prediction market platforms do not necessarily provide the same safeguards required under Missouri's regulated sports betting system.
Based on the data we have, Missouri’s sports betting and prediction markets battle will end up in the courts for a drawn-out battle.