Kalshi has become the first of six prediction market companies to respond to Missouri's order targeting sports event contracts. The Missouri Attorney General's Office says it is now in "ongoing discussions" with Kalshi after sending the company and five competitors cease-and-desist letters last month.
Those conversations don't mean the two sides have reached an agreement. Missouri still maintains that sports event contracts offered in the state fall under its laws, while Kalshi argues that its markets fall under federal oversight.
Missouri Put Six Platforms on Notice
Attorney General Catherine Hanaway sent letters in September to Kalshi, Polymarket, Robinhood, Crypto.com, Novig and Underdog. The state ordered the companies to either comply with Missouri requirements or stop offering sports event contracts to residents.
Kalshi is the first company Missouri has publicly confirmed has responded. The Attorney General's Office hasn't detailed the company's proposal, but the state says discussions between the two sides are continuing.
Missouri's requirements include several major differences from how prediction markets currently operate:
- Companies offering sports products must obtain state licensing
- Operators are subject to state taxes and fees
- Sports participation is limited to people 21 and older
- Prediction market platforms generally allow users beginning at 18
That age difference has become one of the clearest points of disagreement between the two regulatory systems.
Kalshi Says its Exchange Works Differently
Kalshi isn't backing away from its argument that event contracts are federally regulated financial products. The company operates as a CFTC-regulated designated contract market and maintains that federal commodities law, rather than individual state frameworks, governs its exchange. Kalshi Head of Research Nicole Kagan compared the company's structure to traditional exchanges used for agricultural commodities.
She argued that event contracts can similarly allow traders to manage risk by taking positions based on future outcomes. Kagan also emphasized that Kalshi doesn't determine its own market prices. Traders buy and sell against one another, with those transactions establishing the price rather than Kalshi taking a position on which outcome occurs.
Missouri isn't Convinced by the Federal Argument
Missouri sees the sports side of the product very differently. Hanaway's office argues that calling something an event contract doesn't remove it from the state's regulatory authority when the underlying event is a sports contest. That disagreement is hardly unique to Missouri.
Courts around the country have reached different conclusions as Kalshi and other platforms clash with states over whether federal regulation prevents states from applying their own laws. For traders, the practical question is becoming increasingly important. A platform can operate nationally under CFTC oversight while still facing separate challenges over whether individual states can restrict certain contracts.
The Clock is Still Running
Missouri sent its letters on Sept. 16 and 17 and gave the companies one month to demonstrate compliance or stop offering the disputed products. That puts the next stage of the fight relatively close. The Attorney General's Office says further investigative action or a lawsuit could follow, although it hasn't announced a specific timeline. Kalshi's discussions with the state could make its situation particularly interesting as that deadline approaches.
The Trade Handle Prediction Markets Take
We've seen plenty of prediction market disputes head straight to court, so Kalshi talking with Missouri is worth watching. It doesn't mean either side has changed its position, but it creates another possible path for handling the state-versus-federal fight.
The bigger question is whether there is any middle ground. Missouri wants state licensing and a 21-plus requirement, while Kalshi's entire argument rests heavily on operating under one federal framework. If those positions can't be reconciled, discussions may simply become the opening act. Missouri could soon become another state where judges must decide who gets the final word on sports event contracts.