Developing Three Exchanges Sued Three States in Two Days, and Their Best Argument Is That There Is No License to Get

Editor's note: TrueEdge builds odds tools and earns affiliate commissions from licensed sportsbooks, which compete with the exchanges this piece is about. Our standing position is that states should not criminalise federally registered exchanges, and that the fight belongs in civil court and in Congress. Weigh the conflict.

Between Monday and Tuesday, three federally registered exchanges sued three states. On October 26, the North American Derivatives Exchange, which trades as Crypto.com's OG.com, sued Utah Attorney General Derek Brown in federal court in Salt Lake City (No. 2:26-cv-01056). On October 27, Kalshi sued Missouri Attorney General Catherine Hanaway and the Missouri Gaming Commission in St. Louis (No. 4:26-cv-01860). The same day QCX LLC, which does business as Polymarket US, sued Louisiana Attorney General Liz Murrill and the Louisiana Gaming Control Board in New Orleans (No. 2:26-cv-02482).

All three complaints make the preemption argument the industry has made since 2025: the Commodity Exchange Act gives the CFTC "exclusive jurisdiction" over contracts traded on a designated market. That argument has split the circuits, and nothing filed this week settles it. What is new, and worth reading closely, is the second argument in the Missouri and Louisiana complaints. They say there is no license the state could actually grant them.

Missouri: two licenses, both gone

Hanaway's cease-and-desist letter went to Kalshi on September 16. According to Kalshi's complaint, it offered two choices: stop serving Missourians, or get a Missouri Gaming Commission license, pay the state's 10% wagering tax and fees, and turn away anyone under 21. The deadline was October 16. On October 15 the attorney general's office extended it to October 30. Then on October 27, the complaint says, Missouri's solicitor general told Kalshi the state "could not agree to withhold enforcement." Kalshi filed that day.

The licensing paragraph is the part that bites. Missouri's constitution, as amended by the 2024 ballot measure, allows retail and mobile sportsbook licenses. Retail licenses go only to casino operators, professional teams or operators working for them, and so do most mobile ones. Kalshi is none of those. The exception is a statewide cap of two direct mobile licenses for operators with no such tie, and the complaint cites the commission's own resolutions: both went out on April 29, 2026, to Circa Sports and DraftKings. So when the state says "get licensed," Kalshi is asking for a seat that no longer exists.

Missouri's answer, through a spokesperson quoted by SportsBettingDime, is that "it's sports betting – and Missourians voted to subject sports betting to licensing and taxation rules." The office added that it is "confident the federal courts will not prevent her from doing so."

Louisiana: twenty licenses, local first

Polymarket's complaint makes the same point and adds a second count, under the Commerce Clause. Louisiana's Gaming Control Board may issue "no more than twenty" sportsbook licenses. The statute tells it to consider applications first from existing in-state gaming licensees, which the complaint counts as "one casino, fifteen riverboats, and four racetracks." Even a licensed operation, the complaint says, would have to run from Louisiana and serve only people physically in the state. Polymarket calls those "discriminatory, balkanizing measures." It is suing over a December 5, 2025 board advisory that told regulated businesses sports event contracts are illegal gambling. Kalshi filed its own Louisiana suit on October 23, in the Western District.

Utah is the odd one out. It has no sportsbook licenses to offer, so Nadex's complaint is a straight preemption claim. It names the October 20 state-court suit Brown filed against Kalshi as the reason OG.com expects to be next.

Why the licensing point matters

For two years states have answered the exchanges with a simple line: "you can operate here like anyone else; get a license." It sounds reasonable, and judges have found it persuasive. It is what makes a state ban look like ordinary regulation rather than an attempt to shut down a federally registered market.

Missouri's own resolutions take that line apart. If the only licenses an exchange could hold were awarded to a casino-backed sportsbook and a Las Vegas one before the cease-and-desist was even written, then "get licensed" really means "stop." That matters for conflict preemption, the doctrine that asks whether a party can comply with both federal and state law at once. A CFTC rule requires an exchange to give eligible participants impartial access. A state that offers no licence leaves only one way to comply with state law: exit, and break the federal rule. That is a cleaner conflict than any of the arguments about what "swap" means.

The best case against it

The strongest objection, which several courts have adopted, is that scarcity is beside the point. The Ninth Circuit in Assad (August 28) and the Sixth in Schuler (September) held that Kalshi's sports contracts are likely not "swaps" at all. On that reading, the federal statute never reaches them. The state is regulating ordinary sports betting and is entitled to make licenses scarce, local and expensive. A shortage of casino licenses does not give anyone a constitutional right to open a casino. Missouri voters chose a closed model in 2024, and a state has no duty to leave room in it for a newcomer that never applied.

Most of that argument is correct, and the Commerce Clause count is the weakest thing filed this week. Courts have long let states keep gambling local, and Louisiana's preference for its riverboats is hard to tell apart from that tradition. Our objection is narrower. The licensing point does not decide whether these contracts are swaps. It decides how a court should treat a state that insists they are bets. If a judge accepts the swap reading, Missouri's closed licensing makes the conflict plain. If a judge rejects it, the licensing argument does nothing, and Kalshi should not pretend otherwise.

Where these cases land

The filings also show where the exchanges think they can win. Missouri sits in the Eighth Circuit, where Kalshi already has an appeal pending: a federal judge in Iowa denied it relief on September 8, and the appeal was docketed on September 17 as No. 26-2874. Louisiana is in the Fifth Circuit, which has not ruled on any of this. Utah is the exception again. Nadex filed in the district where Judge Robert Shelby ruled for Utah against Kalshi in August, under a Tenth Circuit that refused Kalshi an injunction pending appeal on September 8.

The calendar that matters is in Washington. Kalshi's reply to New Jersey's Supreme Court petition in Flaherty is due November 9. Until the Court decides whether to take that case, every district judge handling these suits is choosing which circuit to follow. What would prove us wrong: a Missouri judge who holds that the closed licensing scheme has no bearing on preemption, before the Eighth Circuit rules in Bird. If that happens, the licensing argument was only ever rhetoric.

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