Prediction Markets Face the Cost of Fighting the States

Missouri illustrates why this argument reaches beyond states that have resisted legal sports betting altogether.

Voters approved the state’s sports-wagering framework in 2024, and the licensed market launched on 1 December 2025. The attorney general’s September enforcement announcement described a system requiring Missouri Gaming Commission permission, a minimum betting age of 21 and a 10% tax on sports-betting gross receipts.

On 18 September 2026, Hanaway’s office announced cease-and-desist letters to six prediction-market businesses: Polymarket, Kalshi, Crypto.com, Novig, Underdog and Robinhood. Its position was that sports event contracts constituted wagering subject to Missouri’s licensing requirements.

Underdog’s response challenges that classification and the state’s authority to enforce it against the company’s activities. The public docket identifies the case as Underdog Exchange DCM, Inc. v. Hanaway, No. 2:26-cv-04300, in the Western District of Missouri.

The reported filing is a request for protection. It does not establish that the court has granted an injunction or accepted Underdog’s legal argument.

The commercial stakes are nevertheless clear. Missouri has built a licensed route into sports betting, with associated taxes and safeguards. A federal exchange claims a different legal basis for serving customers. Resolving that disagreement determines which obligations apply to competing products and how their operators may reach the same audience.

An exchange’s ability to list a contract does not ensure that every intermediary will continue offering it to customers everywhere.

Gambling Insider’s Ohio report, originally published on 8 November, attributed the latest compliance information to the Ohio Casino Control Commission. It placed the businesses at different stages:

The restrictions concern sports contracts in Ohio. They do not establish that the businesses have closed their entire prediction-market services nationally or stopped every category of event contract.

The distinction between new trading and existing positions also matters. Preventing a customer from opening another position, allowing an existing contract to settle and permitting an early exit are separate decisions. The reported restrictions on new contracts should not be expanded into claims that every existing position has been cancelled.

For the customer, the practical result may be a changing product menu within an app they already use. For the exchange, distribution depends on another business’s ability and willingness to maintain access. A federal registration and a familiar consumer interface sit within a chain of separate obligations.

Ohio’s enforcement programme also reaches businesses that support trading without operating the customer-facing exchange.

In a signed notice dated 20 October, the OCCC instructed sports-gaming and fantasy-contest licensees and applicants to stop supporting entities offering sports event contracts to people in Ohio without an Ohio sports-gaming licence.

The services identified included market making, liquidity provision, integrity monitoring, data, platforms, technology and security. The commission required compliance responses by 30 October and preservation of supporting records.

It warned that continued support could prompt renewed suitability investigations and possible licensing action. Those are stated regulatory consequences; the notice does not itself establish that a particular supplier has lost a licence.

That changes the commercial calculation for a company already serving the licensed gambling industry. Revenue from a prediction-market relationship has to be assessed alongside the permissions, customers and partnerships supporting its existing business.

The operational dependency can extend further. A platform may need an intermediary to distribute its contracts, market makers to support trading and technology suppliers to deliver the service. Pressure on any of those relationships can affect availability before the exchange receives a final judgment in its own case.

Ohio’s October notices predate the CFTC’s November intervention. The latest company responses illustrate the overlap between the two positions; they should not be presented as evidence that the federal announcement caused the restrictions.

On 5 November, the Commodity Futures Trading Commission said designated contract markets must remove domestic geographic restrictions that violate its impartial-access requirements within 30 days, or explain why compliance is not feasible.

Its announcement also addressed intermediaries accessing those markets. Exchanges should ensure their compliance with the access requirements within the same period, or provide an explanation. The agency said it would consider the facts and circumstances of individual cases when assessing potential action.

That explanation route is consequential for an exchange dealing with restrictions imposed by another authority. It provides a means of presenting the conflict to the federal regulator. The announcement does not state that every state restriction or court order has automatically ceased to apply.

Nor does a broker’s decision to restrict access settle the federal classification dispute. A company may narrow its offering while a legal question remains contested. The available compliance reports do not reveal each business’s internal assessment or its expected financial cost.

The federal regulator is also pursuing its position through litigation. On 27 October, it announced its lawsuit seeking to block Utah’s enforcement against federally registered prediction markets.

A 6 November court minute entry set a hearing on the request for temporary and preliminary relief for 20 November. Utah’s response on that motion is due on 11 November. Those dates establish the next procedural steps; they are not a decision on the underlying claims.

There are several plausible commercial costs even where public filings do not provide a reliable pound or dollar total.

Legal proceedings require management attention and spending while generating uncertain timetables. Product restrictions create work around location controls, customer notices, support and existing positions. Changes to supplier or distribution relationships can require further operational adjustments.

Customer acquisition becomes harder to evaluate as well. A customer’s initial activity offers an incomplete guide to future revenue if the available contracts may change shortly after registration. Repeated restrictions can also make the service harder to explain consistently.

Our assessment is that dependable access deserves greater weight in how these businesses are evaluated. A theoretical national audience does not tell an operator how much trading it can reliably distribute, through which intermediaries or for how long.

That does not make litigation commercially irrational. A successful challenge could preserve access and establish valuable legal clarity. Restricting a product could also be a rational response to immediate enforcement risk. The different actions reveal choices under uncertainty, without proving which company has chosen the better long-term strategy.

The American conflict should not be mistaken for a new route around British gambling licensing.

In February, the Gambling Commission said that, depending on the business model, current prediction-market products appeared likely to fall within the betting-intermediary category. It also distinguished gambling facilities from financial-services products regulated by the Financial Conduct Authority.

The British commercial setting differs because sports betting already operates across Great Britain under a single overarching framework. The attraction of a federal route in the United States is tied to a market where conventional sportsbook permissions have developed state by state.

The relevant lesson for British operators and suppliers is how closely product distribution depends on the legal responsibilities of every business involved. An exchange, an app and a data supplier can face different decisions around the same contract.

The next useful checkpoints are concrete: Coinbase’s stated 13 November restriction date, the Utah hearing scheduled for 20 November and exchanges’ responses to the CFTC’s access requirements.

Each will answer a different question. A product restriction changes availability. A hearing considers a request for relief. A regulatory response explains how an exchange proposes to meet its obligations. None should be substituted for a final, nationwide resolution of the dispute.

We would judge commercial progress by whether customers can keep using a clearly defined service through distribution and supplier relationships that can withstand scrutiny. That requires accurate information about where new contracts are available and what happens to positions already opened.

Our earlier article examined the CFTC’s effort to establish national access. The latest developments show the work required to deliver it: defending that position in court, managing intermediaries and addressing risks to other regulated businesses. For prediction markets, the cost of the dispute is already part of operating the product.