Developing Missouri Offered Three Exchanges a Licence and a 10 Percent Tax. On Day 29 of a 30-Day Clock, Two of Them Chose Two Different Courthouses

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The letter Missouri sent Novig is three pages long and dated September 17. It offers two options and numbers them. "(1) it must cease and desist from such activity; or (2) it must obtain a license from the Missouri Gaming Commission and pay all associated state taxes and fees." The tax is 10 percent of adjusted gross revenue. The licence fee is "as much as $500,000," renewable every five years. The deadline is thirty days. The thirtieth day is tomorrow.

On Friday, Novig's exchange entity, Ludlow Exchange, LLC, sued Attorney General Catherine Hanaway in the Eastern District of Missouri. The same day, North American Derivatives Exchange, Inc., the designated contract market that does business as Crypto.com, sued her in the Western District. Per Covers, gaming lawyer Daniel Wallach's reading of the split is that two districts cannot draw the same judge. Four days earlier, on Tuesday, Underdog Exchange DCM, Inc. sued Tennessee's attorney general and all ten members of the Sports Wagering Council in Nashville, four days after that state's October 9 order. Three exchanges, two states, one week, and in every case the state had put a licence on the table first.

Nobody took it. The reason matters more than the suits.

The dockets, since the trade press has only one of them

CourtListener's public index carries all three filings, which is how we checked Covers' Friday-evening story. Ludlow Exchange, LLC v. Hanaway is E.D. Mo. 4:26-cv-01780, filed October 16; the docket names Hanaway, gaming commission chair Jan M. Zimmerman and executive director Michael A. Leara (the index spells his surname "Lear"), with Winthrop B. Reed III of Lewis Rice in St. Louis as counsel. North American Derivatives Exchange, Inc. v. Hanaway is W.D. Mo. 4:26-cv-00969, same date. Underdog Exchange DCM, Inc. v. Skrmetti is M.D. Tenn. 3:26-cv-01461, filed October 13 and assigned to Judge William Lynn Campbell Jr.; the complaint attaches "Exhibit 1 - Letter dated October 9, 2026 to Mr. Levine," which is the cease-and-desist addressed to "Mr. Levine," presumably co-founder Jeremy Levine. We could not open the docket pages themselves, which returned 403 to our fetcher; the entries above come from the site's search API and we have not read the complaints.

What the dockets also show is the pattern the exchanges would rather you not notice. Ludlow sued New York on August 4, Massachusetts, Washington and New Mexico on August 6, and Wisconsin on August 14, two days after Novig's August 4 nationwide launch and the $125 million first week it announced. In Massachusetts the parties filed a joint motion to stay and a stipulation of voluntary dismissal on August 20. In New Mexico, a joint motion to stay on August 25. Underdog sued five states on September 8, surrendered its daily-fantasy licences in seven, and has told SBC Americas it needs the Supreme Court "to decide whether we'll have one enforceable federal standard or state-by-state regulation." Its own word for the current state of things was "a mess."

These are not suits filed to be won. They are suits filed to be stayed.

Why not the licence

Covers' Amy Calistri asked the right question on Friday: why do the operators not simply seek a Missouri licence? Is the 10 percent tax the impediment, or are they waiting for the Supreme Court?

The tax is not it. DraftKings and FanDuel pay 10 percent in Missouri and have since the market opened on December 1, 2025, and both have built exchange businesses alongside. A $500,000 licence is a rounding error against the legal bills of the dozen-plus federal suits these three exchanges have filed since August. Novig even clears Missouri's one consumer-protection complaint that would otherwise bite: the state's September 18 release accuses five of the six recipients of weak age verification and omits Novig, whose floor is 21, the same as Missouri's. Crypto.com's exchange has been designated since February 18, 2004, when it was called HedgeStreet; it has been through IG Group and a 2022 sale to Foris DAX Markets. It knows how to hold a licence.

The reason is that a licence is a concession. The moment one CFTC-designated exchange accepts a state gaming licence for sports event contracts, it has agreed in writing that those contracts are wagers a state may license, which is the exact proposition every one of these complaints exists to deny. Underdog's Tennessee complaint, per Sports Betting Dime, asks the court to stop the state from "regulating, or terminating Underdog's offering of lawful derivatives contracts on federally regulated markets." You cannot file that sentence in Nashville on Tuesday and apply for a Missouri sports-wagering licence on Wednesday. The licence does not cost 10 percent. It costs the Supremacy Clause argument in every other circuit, and the Supreme Court case New Jersey asked for in September.

So the exchanges choose the courthouse, and they choose it carefully. The Eighth Circuit, which would hear a Missouri appeal, has not ruled on a prediction-market case. The Sixth Circuit, which covers Tennessee, has ruled for Ohio and for Tennessee against Kalshi, and Kalshi has petitioned the full court for rehearing. Missouri's own letter cites a string of eight decisions for the proposition that these contracts are not "swaps," running from the Ninth Circuit's August 28 Assad ruling through, pointedly, N. Am. Derivatives Exch. v. Nevada, the 2025 District of Nevada loss by the same Crypto.com exchange that sued Missouri on Friday. Underdog is suing in a circuit that has already decided the question against its side. Novig and Crypto.com are suing in one that has not. Only one of those is a bet on winning.

The strongest version of the exchanges' case

The best argument for refusing the licence is not legal. It is that a national exchange cannot exist under fifty gaming regulators, and that the states know it. An order book is one market. A contract listed in Missouri under Missouri rules, with a Missouri age floor and a Missouri tax on a Missouri-defined revenue base, is not the same contract as the one listed in Illinois, and a price that differs by state is not a price. Tarek Mansour put the extreme version of this to DC Fintech Week on Wednesday: the choice is "whether prediction markets exist in the U.S. or whether they go offshore." Underdog's Stacie Stern put the moderate version: "we didn't want to sue, but sometimes it's the only way to resolve a dispute." Both are describing the same fact. Fifty licences is not a compliance programme, it is a different product.

We think that argument is correct and we think it is the reason to prefer a federal rule to state criminal enforcement, which is the position this site has taken for months. But it has a cost the exchanges are not paying. The CFTC's exclusive jurisdiction over swaps was written for a world in which the counterparties were hedging something. The exchanges' answer to the states, in Nicole Kagan's words to St. Louis Public Radio, is "we're not the house." Nevada's Mike Dreitzer answered that on Wednesday on a tribal webinar, and his answer is the one the states will brief: when the same exchange "creates a third-party company to take the other side," he said, "I call that being a bookie." He also put a number on the demographic the Missouri letter is really about: more than $8 billion traded on Kalshi since January 1 by users aged 18 to 20. We cannot verify that figure and he did not say where it came from. But Missouri's voters set 21 for a reason, and "we're not the house" does not answer it.

What we do not know, and what would change our mind

We have not read the two Missouri complaints or the Tennessee one. Covers quotes Novig's purpose as stopping the state from "enforcing Missouri's preempted gambling and sports-wagering laws against federally regulated transactions"; we are reporting that, not the pleading. We do not know whether either Missouri plaintiff has asked for a temporary restraining order, which would tell us whether these suits are meant to be litigated or parked. We do not know whether Kalshi, which Spectrum News reported on October 4 was the first of the six to respond and is in "ongoing discussions" with the attorney general's office, is negotiating the very licence the other two sued to avoid. If Kalshi signs something in Jefferson City, the concession argument above collapses and the holdouts are simply holdouts.

And if the Eighth Circuit follows the Third rather than the Sixth and Ninth, then filing on day 29 in St. Louis and Kansas City was the correct read of the map, and this column was wrong about what the suits are for. Missouri's letter closes with a sentence that reads differently depending on which of those happens: the state "remains open to possible legislative reforms in the future." The exchanges are betting that "the future" arrives from Washington before it arrives from the Eighth Circuit. The state is betting it does not have to wait.