Four prediction market companies filed five federal lawsuits on November 9, seeking to stop Arkansas and Missouri from enforcing state gambling laws against their event-contract businesses.
Polymarket US filed separate lawsuits against both states, while Crypto.com sued Arkansas and Underdog and Robinhood each challenged Missouri.
The companies argue that their federally regulated event contracts fall under the Commodity Futures Trading Commission’s (CFTC) authority rather than state gambling regulations.
The filings follow Arkansas’ lawsuit against Kalshi and Missouri’s earlier warnings to prediction market operators.
Polymarket US filed its Arkansas complaint in the U.S. District Court for the Western District of Arkansas, while Crypto.com filed its case in the Eastern District.
Polymarket, Robinhood and Underdog brought their Missouri cases in the U.S. District Court for the Western District of Missouri.
All four companies are seeking court orders preventing state authorities from applying gambling restrictions to their prediction market operations.
Their central argument concerns federal preemption, the legal principle that federal law can override conflicting state regulations.
The companies maintain that event contracts traded on CFTC-designated contract markets are derivatives governed by the federal Commodity Exchange Act (CEA).
They argue that state enforcement would interfere with the CFTC’s exclusive jurisdiction over these markets.
However, the lawsuits represent the operators’ legal positions, not final judicial determinations that state gambling laws are invalid.
The Arkansas filings followed Attorney General Tim Griffin’s November 4 lawsuit against Kalshi, which alleged that the company’s event contracts violated state gambling requirements.
Polymarket cited that enforcement action as evidence that other prediction market operators face similar legal risks.
In its complaint, Polymarket argued that Congress established the CFTC’s exclusive authority over designated derivatives markets through amendments to the Commodity Exchange Act in 1974.
The company also warned that state enforcement would disrupt its nationwide operations, reduce market liquidity and threaten commercial relationships.
Polymarket described the potential harm as “irreparable,” arguing that financial compensation would not adequately address the consequences of being forced to restrict its services.
The company is seeking both declaratory relief, which would clarify the applicable legal requirements, and an injunction preventing enforcement.
Crypto.com’s separate Arkansas lawsuit similarly seeks protection against state gambling restrictions on federally regulated event contracts.
Missouri’s dispute began before the latest filings.
In September, state authorities sent cease-and-desist letters to prediction market operators, according to court documents cited by InGame.
The letters reportedly instructed operators to leave Missouri or obtain authorization from the Missouri Gaming Commission.
Underdog and Robinhood argue that these demands conflict with federal law.
Underdog’s complaint invokes the Constitution’s Supremacy Clause, maintaining that Missouri cannot enforce gambling laws against activities reserved for federal regulation.
The company previously applied for a Missouri sports betting license but withdrew its application before the state’s December 2025 sportsbook launch.
Polymarket’s Missouri challenge also raises a separate constitutional argument involving the dormant Commerce Clause, which limits certain state restrictions on interstate commerce.
These arguments give the federal courts several legal questions to consider beyond whether prediction market contracts constitute gambling.
The lawsuits arrive as the CFTC increases scrutiny of geographic restrictions imposed by federally regulated exchanges.
In a November 6 notice, the agency directed designated contract markets to remove certain state-based access restrictions within 30 days or explain why they could not comply.
The directive adds a complication for operators facing state enforcement threats.
Restricting access in a particular state may help an exchange comply with local gambling requirements, but the CFTC is questioning whether such restrictions align with federal obligations.
The courts must now consider whether the companies have demonstrated sufficient grounds for injunctions while their broader legal challenges proceed.
The immediate outcome will determine whether Arkansas and Missouri can pursue enforcement against these operators during the litigation, rather than settle the nationwide jurisdiction dispute.
Vladimir is a senior iGaming writer and editor, adept at breaking down the key details of crypto casinos and sportsbooks so players don’t have to, delivering honest, player-focused information that actually matters.
