Missouri's Amendment 2 puts prediction markets under state wagering law

Catherine Hanaway's cease-and-desist letters to six prediction market operators rest on a single legal proposition: that Missouri voters, when they approved Amendment 2 in November 2024, created a licensing regime that applies to anyone offering sports event contracts to Missouri residents — regardless of what the offering platform calls the product.

That proposition is not obviously wrong, and the consensus reading of it, which treats this as a routine state enforcement action likely to be preempted by the Commodity Exchange Act, underweights what Hanaway actually has here.

The Missouri Gaming Commission's regulated market opened on December 1, 2025, with a licensing structure that includes fees up to $500,000, a ten percent tax on gross receipts, a minimum wagering age of twenty-one, and a problem gambling fund supported by operator revenue. Amendment 2 did not just legalize sports betting. It built an administrative apparatus that generates state revenue, protects a particular class of consumer, and is now actively being circumvented — by Hanaway's account — by platforms that have decided federal commodities law insulates them from that apparatus entirely.

The preemption argument the platforms rely on is real. The Commodity Exchange Act does grant the CFTC exclusive jurisdiction over contracts traded on designated contract markets, and Kalshi holds that designation. But preemption under the Supremacy Clause operates on statutory text, not on a platform's preferred characterization of its own product. The question is whether a sports event contract is, as a matter of federal law, a swap or futures contract that Congress intended to remove from state gambling regulation — and that question has not been cleanly resolved at the Supreme Court level. Hanaway's letters cite federal court decisions she reads as supporting state authority. The platforms read those decisions differently. That is a live dispute, not a settled one.

What Hanaway has that other state attorneys general may not is a voter mandate with a specific economic architecture attached to it. Amendment 2 was not a vague legislative preference. It was a ballot measure with tax rates, licensing fees, and designated beneficiaries — educational institutions, a compulsive gaming fund — written into it. When a federal preemption defense is used to avoid a state regulatory structure that voters built and that is now generating public revenue, the political and legal pressure on that defense becomes qualitatively different from the pressure it faces in a state where sports betting is simply prohibited.

I think the market for this outcome, to the extent one exists, is mispriced toward the platforms prevailing quickly. The preemption argument may ultimately hold, but it will not hold fast. The Ninth Circuit's tribal ruling has already complicated the landscape for CFTC preemption claims, and Hanaway has thirty days of compliance window — which means the platforms face a near-term decision about whether to operate in Missouri while litigation proceeds or to withdraw and litigate from outside the market.

The legal standard that governs here is the one the Supreme Court has applied to Supremacy Clause preemption: Congress must have made its intent to displace state law clear, either expressly or through a scheme of federal regulation so pervasive that there is no room for state law to operate. Whether the Commodity Exchange Act, as applied to sports event contracts offered to retail users in a state that has built a licensed wagering market, meets that standard is the question Hanaway is forcing into the open.