Missouri Atty. Gen. Catherine Hanaway sent cease-and-desist letters to every prediction market company operating in the state, saying their sports contracts amount to unlicensed sports betting.
“The way that they take contracts, as what they would call them, I call them bets online on sporting events is just like how FanDuel and others do it,” Hanaway told Heartland News on Thursday.
A press release and the six letters to Crypto.com, Kalshi, Novig, Polymarket, Robinhood and Underdog were published Friday.
Missouri is one of numerous states that are embroiled in litigation against prediction markets offering sports event contracts. It is also the latest state to offer legal sports betting, which did so in December.
Multiple questions regarding Hanaway’s statements went unanswered by her office.
What Hanaway told local media
Hanaway does not appear to want prediction markets banned, rather to pay the same tax that regulated operators must adhere to.
Sports betting operators pay a flat tax rate of 10% in Missouri. Right now, prediction markets are sidestepping those tax requirements. Hanaway said their fee structure may differ from a traditional sportsbook’s, but that it still fits the definition of gambling under Missouri law.
“I think it siphons a lot of money from a lot of the other sports betting sites that have to pay tax in Missouri,” she added.
Claimed predictions do not verify identity
Hanaway was also concerned about underage individuals using prediction markets, claiming that operators “don’t have any kind of age verification.”
The largest predictions operators do offer standard know-your-customer verification, sometimes offered by the same companies that power those checks for licensed betting operators.
Most prediction markets allow users as young as 18 to sign up, three years younger than Missouri’s legal sports betting age of 21. Novig is the only platform that requires customers to be 21 before signing up.
Hanaway said she is hoping for a settlement agreement between the state and prediction markets, and says she has seen other states make settlements.
Missouri not part of 44-state coalition
Missouri was not among the states that jointly signed a July letter to the Commodity Futures Trading Commission arguing the agency lacks authority to regulate sports-related prediction markets.
The coalition, made up of attorneys general from 44 states and led by Ohio Atty. Gen. Andy Wilson, submitted the letter as the public comment period on the CFTC’s proposed rule closed. It argued the rule “goes well beyond its statutory authority” and should be redrafted to align with the Commodity Exchange Act.
Underdog ditched Missouri for predictions
One point Hanaway did not touch on in her comments to local media is the fact that Missouri has very clearly felt the economic impact of prediction markets already before its legal betting market launched.
Underdog was set to launch sports betting in its second state after first launching in North Carolina. But the brand, which was fully licensed and days away from launching through an access deal with the Kansas City Royals, decided instead to pivot on its plans for regulated sports betting and moved to predictions.
