Novig and Crypto.com’s Exchange Ask Federal Courts to Block Missouri Enforcement
Two federal suits filed on Oct. 16 seek preemption under the Commodity Exchange Act.
Key Takeaways
- Ludlow Exchange (doing business as Novig) filed a 42-page complaint in the Eastern District of Missouri on Oct. 16.
- North American Derivatives Exchange, owned by Crypto.com, filed a 39-page complaint in the Western District on Oct. 16.
- Attorney General Catherine Hanaway sent cease-and-desist letters in September to six firms and gave Novig until Oct. 17 to comply.
- Both exchanges argue the Commodity Exchange Act and CFTC designation preempt Missouri gambling enforcement; Novig says the CFTC designated it in June.
- Briefing in the related KalshiEX v. Bird Eighth Circuit appeal is scheduled to finish on Dec. 6.
Two U.S. derivatives exchanges sued Missouri on Friday, Oct. 16, asking federal judges to stop the state from treating their sports event contracts as illegal, unlicensed betting. Ludlow Exchange, which operates as Novig, filed a 42-page complaint in the Eastern District of Missouri naming Attorney General Catherine Hanaway, Missouri Gaming Commission Executive Director Michael A. Leara and commission Chair Jan Zimmerman. North American Derivatives Exchange, the Crypto.com-owned exchange, filed a 39-page complaint in the Western District, naming Hanaway and members of the gaming commission.
What the state demanded in September
In September, Attorney General Catherine Hanaway's office sent cease-and-desist letters to Robinhood, Underdog, Novig, Crypto.com, Kalshi and Polymarket, telling them to stop offering sports event contracts to Missourians unless they obtain a Missouri Gaming Commission license. The letters noted licensed sportsbooks in the state pay a 10% tax on gross receipts and must exclude anyone under 21. Hanaway wrote on X on Sept. 18: "Companies cannot repackage sports bets as ‘event contracts’ to evade Missouri law."
The exchanges' legal theory
Novig's complaint argues that the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive jurisdiction over swaps traded on a federally designated contract market and that Novig's event contracts are swaps. The filing states the CFTC granted Novig that designation in June. Novig seeks a declaration that Missouri's gambling laws are preempted as applied to its exchange and requests preliminary and permanent injunctions.
North American Derivatives Exchange advances the same core argument in its complaint, saying Congress granted the CFTC "exclusive jurisdiction" over trading on federally designated contract markets and that any enforcement by Missouri would be preempted. Its filing includes a footnote stating the attorney general's office "incorrectly addressed" its cease-and-desist letter to Foris DAX, Inc., which the letter called Crypto.com, rather than to North American Derivatives Exchange.
Timing and related litigation
Novig's complaint says the office of the attorney general gave the company until Oct. 17 to comply. The filings ask courts for early relief to preserve the parties' positions while the legal question is resolved. The complaints point to Kalshi's pending appeal in KalshiEX v. Bird at the Eighth Circuit, which covers Missouri; briefing in that appeal is set to wrap up on Dec. 6.
No enforcement action against either exchange had been announced as of Monday.
Market context
The suits place the exchanges on a direct collision course with state enforcement while they argue federal preemption under the Commodity Exchange Act and the Commodity Futures Trading Commission designations. For coverage of regulatory developments see regulation and for market product implications see b2b.
Frequently Asked Questions
Who filed the federal suits and when were they filed?
Ludlow Exchange (operating as Novig) filed a 42-page complaint in the Eastern District of Missouri and North American Derivatives Exchange filed a 39-page complaint in the Western District on Oct. 16.
What did Missouri's September cease-and-desist letters require?
The letters ordered Robinhood, Underdog, Novig, Crypto.com, Kalshi and Polymarket to stop offering sports event contracts to Missourians unless they obtain a Missouri Gaming Commission license; the letters noted licensed sportsbooks pay a 10% tax on gross receipts and must exclude anyone under 21.
What legal argument are the exchanges using to seek protection from Missouri enforcement?
Both exchanges contend the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive jurisdiction over swaps traded on federally designated contract markets, that their event contracts are swaps, and that state enforcement is therefore preempted.
Did Novig have any federal designation related to its argument?
Novig's filing states the Commodity Futures Trading Commission granted Novig a federally designated contract market designation in June.
How does ongoing litigation elsewhere relate to these suits?
The complaints cite Kalshi's pending appeal in KalshiEX v. Bird at the Eighth Circuit, where briefing is set to wrap up on Dec. 6; the exchanges seek early injunctions to preserve their legal positions pending resolution.
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About the author
Tessa Coleman
Betting Markets Correspondent
Tessa Coleman covers betting products and markets — sportsbook launches, odds and trading technology, and the fast-growing prediction-market space from regulated exchanges to event contracts. The stories lead with the product or the ruling, name the operators and platforms precisely, and translate trading jargon into what bettors can actually do. When a book reworks its pricing or a prediction market wins a license fight, Tessa Coleman explains the mechanics and the stakes.
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