Missouri Attorney General Catherine Hanaway is ordering prediction market platforms to stop operating in the state. Hanaway says the companies are siphoning money from sports betting at a time when the state’s revenue from the industry is growing.
The Attorney General made it clear that she sees the sports markets offered on platforms such as Kalshi as gambling and believes they should be regulated and taxed in the same way.
“The way that they take contracts, as what they would call them, I call them bets online, on sporting events, is just like how FanDuel and others do it,” Hanaway said in comments to KFVS12.
“Even though their fee structure might be a little bit different, it still fits the definition of gambling in Missouri,” she added.
Goal Is For Prediction Markets To Pay Tax Revenue
Hanaway made no secret of the reason she is preparing the cease-and-desist orders: tax revenue.
“I think it siphons a lot of money from a lot of the other sports betting sites that have to pay tax in Missouri,” she said.
She added that the goal is to reach an agreement with prediction market companies to contribute to state taxes. It opens the door to a deal similar to the one agreed in North Carolina. The state allows federally regulated prediction markets to operate, with a 6% market tax.
Hanaway Expects Companies To File Lawsuits
Although hopeful of reaching an eventual agreement, Hanaway said she expects a hostile response from prediction market companies.
“Chances are they may sue us once they get this cease-and-desist letter, because these companies argue that they are regulated at the federal level as a commodity, like the corn and bean futures or farmers’ trade, that they have the same regulatory entity, and we say not quite like that,” Hanaway said.
In other states that have issued cease-and-desist letters, Kalshi has been quick to file lawsuits in federal courts. However, states have secured legal victories in the last 14 federal court verdicts. The Ninth Circuit again ruled against Kalshi this week in its battle with California tribes
Kalshi spokesperson Elisabeth Diana told Gaming America, “We’re reviewing all of our options to address this decision, including appeal. This ruling is hard to square with other federal laws, which leave regulation of on-exchange derivatives trades exclusively to the CFTC.”
Sports Betting Revenue Growing In Missouri After Slow Start
Sportsbooks in Missouri pay 10% of revenue back to the state in taxes. Hanaway did not specify that she would accept the same rate from prediction markets./p>
Missouri is the latest state to launch legal sports betting in the US, opening the market in December last year.
Early results were disappointing, with companies’ heavy spending on marketing and promotions impacting taxable revenue.
The first two months yielded just over $500,000 for the state from a handle of almost $1 billion. The handle has dropped, but with fewer deductions from operators, revenue has risen.
