Kalshi Sues Missouri Over Cease-and-Desist Order Compliance

Kalshi, a prediction market operator, has filed a federal lawsuit against Missouri, challenging a cease-and-desist order issued by Attorney General Catherine Hanaway. The company contends it cannot comply with the order’s demand to obtain a state wagering license due to a lack of available avenues and potential conflicts with federal law.

What Happened

Kalshi initiated a federal lawsuit on Tuesday, October 27, against the state of Missouri, following a cease-and-desist notice issued by Attorney General Catherine Hanaway to six sports event contract platforms last month, according to SBC Americas. Kalshi argues that Missouri’s attempt to prevent its operation constitutes regulation that infringes upon its federal right to offer event contracts under the Commodity Exchange Act (CEA) and the oversight of the Commodity Futures Trading Commission (CFTC).

The lawsuit seeks a temporary restraining order, preliminary injunction, and permanent injunction to block Hanaway and the Missouri Gaming Commission (MGC) from pursuing further compliance and enforcement actions against the company, as reported by SBC Americas. Hanaway’s office had announced on September 16 that it issued cease-and-desist letters to six prediction market platforms, including Kalshi, accusing them of offering products akin to illegal sports betting and ordering them to secure MGC licenses to operate in Missouri.

Kalshi’s lawsuit mirrors arguments from other prediction market operators, such as Novig and Crypto.com, which also sued Missouri in federal court earlier in October, according to SBC Americas. Kalshi asserts that it cannot comply with the order’s directive to obtain a state wagering license, stating that “no license is realistically available to Kalshi” under Missouri’s current licensing regime. Additionally, Kalshi claims that ceasing operations would conflict with federal law, specifically the CFTC’s impartial access requirement.

Key Details

• Kalshi filed a federal lawsuit on October 27, challenging Missouri’s cease-and-desist order issued by Attorney General Catherine Hanaway (SBC Americas).
• The lawsuit seeks a temporary restraining order and injunctions against further enforcement actions by Missouri authorities (SBC Americas).
• Kalshi argues that it cannot obtain a Missouri Gaming Commission license due to existing licensing allocations and its inability to qualify for tethered licenses (SBC Americas).
• Compliance with the cease-and-desist order to cease operations could jeopardize Kalshi’s compliance with the CFTC’s impartial access requirement, according to the court complaint (SBC Americas).
• The Missouri Attorney General’s office expressed confidence in winning the court fight, stating that sports betting rules should apply uniformly (SBC Americas).

Why It Matters

This lawsuit represents a critical legal challenge in the ongoing dispute between state regulators and prediction market operators regarding their classification and legality. Missouri views these platforms as offering products equivalent to illegal sports betting, requiring state licensing and taxation, similar to its regulated sports betting market established in December 2025 (SBC Americas). The legal actions by Kalshi, Crypto.com, and Novig directly challenge the states’ authority to regulate these platforms, asserting federal oversight under the Commodity Exchange Act (CEA).

The outcome of these lawsuits could clarify the regulatory landscape for prediction markets, particularly concerning the delineation of state versus federal jurisdiction. Kalshi’s argument that no state license is realistically available and that ceasing operations would violate federal law highlights a significant legal and operational conflict for these entities operating in multiple states (SBC Americas).

What’s Next

Kalshi is seeking a temporary restraining order, preliminary injunction, and permanent injunction from the court to prevent Missouri from pursuing further compliance and enforcement actions against the firm (SBC Americas). The Missouri Attorney General’s office, which anticipated such lawsuits, stated its confidence in prevailing in federal court (SBC Americas). The federal courts will determine the validity of the state’s cease-and-desist orders and the extent of state regulatory authority over prediction market operators.