Missouri Attorney General Catherine Hanaway sent cease-and-desist orders on Friday to six companies selling sports event contracts in the state, and nearly every story since has run under some version of the word “crackdown.” Almost none of them quoted the part where Hanaway says what she actually wants, which is not for Kalshi and Polymarket to leave Missouri.
She wants them licensed by the Missouri Gaming Commission and paying the state’s gambling tax. That is a different story from a ban, and it is a much more interesting one, because the tax system she is inviting them into collected $521,000 in its first month on $543 million in wagers.
The Letters Say Stop. The Attorney General Says Pay.
The orders went to Polymarket, Kalshi, Crypto.com, Novig, Underdog and Robinhood, with 30 days to comply. Hanaway’s framing, reported by ABC 17 News, is that the products are gambling wearing a financial-instrument costume: “Companies cannot repackage sports bets as ‘event contracts’ to avoid Missouri law.”
Her second statement is the one that gives the game away. “Missouri expects all online sports wagering platforms to comply with Missouri’s sports betting laws, and Kalshi is no exception,” she said. “Otherwise, the State of Missouri will take legal action.”
Compliance, here, does not mean withdrawal. It means a licence application, a regulator, an age-verification regime and a tax return. Speaking to KCTV in St. Louis, Hanaway put the six companies on exactly the same footing as the sportsbooks already operating in the state, arguing their contracts fit “four square the definition of gambling in Missouri” even if the fee structure differs. The goal is to bring them under the gaming statutes and collect. Suing is the fallback if they decline.
None of that is scandalous. States license and tax gambling; that is the ordinary arrangement, and Missouri voters approved it. But “crackdown” and “ordered to halt” describe an enforcement action against a prohibited product, and this is a revenue dispute with a competitor that has not been paying in. Those are not the same thing, and the coverage has mostly picked the more dramatic of the two.
The System She Wants Them Inside Collected $521,000 on $543 Million
Missouri voters passed Amendment 2 in November 2024, retail and online books opened on December 1, 2025, and the state taxes operators at 10 percent of adjusted gross revenue. The word doing the work in that sentence is “adjusted.” Operators may subtract promotional free-bet credits from gross revenue before the tax is calculated, so a book handing a new customer $200 in free bets deducts the full $200.
The result, tracked in a Bright Side of News analysis of the state’s returns, is a gap between volume and collections that is hard to look away from. In December, Missourians wagered $543 million and the state collected $521,000 in tax. Promotional spending consumed nearly all of the taxable base. Through the first quarter of 2026, $1.53 billion in handle produced roughly $3.6 million in tax. Industry trackers following the monthly reports put the first six months at around $2 billion wagered and something in the region of $8 million collected.
Hanaway’s own justification is that Missourians “voted for a safe, well-regulated sports wagering market that supports public education and addresses problem gambling.” Public education’s share of $521,000, split across a state of six million people, is not a number anyone would build a policy argument around if they had a better one.
Why the Letters Went Out in September and Not in January
Missouri has watched prediction markets operate inside its borders for the entire life of its legal sportsbook industry. The letters went out on September 18 because the legal weather changed three weeks earlier.
The scorecard through 2026 runs roughly like this:
- April 6: A divided Third Circuit panel sided with Kalshi against New Jersey, holding that sports event contracts are “swaps” under the Commodity Exchange Act and that federal jurisdiction preempts state gambling law.
- July 7: Judge Analisa Torres in the Southern District of New York rejected Kalshi’s preemption claim under all three available theories, express, field and conflict, and denied its injunction against New York regulators.
- August 28: A unanimous Ninth Circuit panel handed Nevada a win, writing that “the substance of the sports event contracts offered on Kalshi’s exchange is sports gambling, regardless of whether Kalshi calls them swaps.” Holland & Knight’s read of the opinion is that the panel found the statutory definition of a swap reaches events with financial or commercial consequences, not the outcome of a ball game.
Set Hanaway’s letter next to that August opinion and the resemblance is not subtle. Her stated position is that “federal law does not preempt state law in this area, and sports ‘event contracts’ do not qualify as ‘swaps’ governed by the federal Commodity Exchange Act.” That is the Ninth Circuit’s holding, restated. Missouri is not floating a theory. It is collecting on one.
The federal side of this has gotten stranger as the states have gotten bolder. The Commodity Futures Trading Commission has now sued nine states, including Kentucky, Minnesota and Arizona, to stop them regulating prediction markets under their own gambling laws. It is doing so while operating with exactly one commissioner, a structural problem we wrote about earlier this month. Arizona went the other direction entirely and filed 20 misdemeanor counts against Kalshi, four of them for taking wagers on elections, including its own governor’s race.
Where We Come Down
The Ninth Circuit got the substance right. A contract that pays out when the Chiefs cover is a bet, and calling it a derivative does not change what the customer is doing or what happens to them when it goes badly. States have regulated that activity for a century and Congress has never clearly taken the power away. Missouri is entitled to license these companies and tax them, and it will probably win.
What it should stop doing is selling the fight as consumer protection. The evidence for that framing is a regulated market whose promotional deduction hands back almost the entire tax base, which means Missouri’s “safe, well-regulated” alternative currently protects bettors from very little and funds schools with rounding error. If problem gambling is the concern, the lever is deposit limits, advertising restrictions and closing the promo deduction, and none of those require a letter to Robinhood. If revenue is the concern, and the numbers say it is, Hanaway should say so plainly. Voters approved a tax. She is trying to collect it. That is a legitimate thing for an attorney general to do and it does not need a costume either.
The federal posture deserves a harder look than it is getting. An agency running on a single commissioner, with no quorum requirement to stop them, has sued nine sovereign states to shield an industry from laws those states’ voters passed. Whatever the merits of preemption, that is not a regulator holding the line. It is one appointee making national gambling policy by litigation, and the Supreme Court should take New Jersey’s petition and end it.
For now, the six companies have until roughly the third week of October. The interesting question is not whether they stop. It is whether any of them quietly files for a Missouri licence, because the first one that does concedes the argument the CFTC has spent nine lawsuits trying to win.