Kalshi Missouri Talks Follow a Rare Federal Court Win

Kalshi is fighting the states on two tracks at once. In Missouri, the attorney general's office says it is now in "ongoing discussions" with the prediction market after sending it a cease-and-desist letter last month, making Kalshi the first of six targeted companies the state has publicly confirmed as responding. The Kalshi Missouri talks, reported on Monday, October 5, 2026, come days after a federal judge in Chicago handed the company a rare courtroom victory over Illinois.

What happened

Missouri Attorney General Catherine Hanaway sent letters on September 16 and 17 to Kalshi, Polymarket, Robinhood, Crypto.com, Novig and Underdog, ordering them to comply with state requirements or stop offering sports event contracts to residents within a month, according to Trade Handle. The state has not detailed Kalshi's proposal, and discussions do not mean an agreement has been reached. The attorney general's office said further investigative action or a lawsuit could follow, without giving a timeline.

Hanaway's position is blunt. "Companies cannot repackage sports bets as 'event contracts' to avoid Missouri law," she said in a statement last month, quoted by St. Louis Public Radio. "Any company that wants to offer sports wagering in Missouri must be licensed by the Missouri Gaming Commission, pay the required taxes and fees, and ensure no one under 21 can place a bet." Prediction markets generally allow users from age 18.

Kalshi's head of research, Nicole Kagan, told the station that the company runs "a peer-to-peer exchange," adding: "We're not the house. We're not setting pricing." She argued that sportsbooks profit when customers lose, while Kalshi does not. Kagan also said Kalshi bars insiders from trading on outcomes they can influence, such as campaign staff on their own campaigns or team members on their sporting events.

The Illinois decision came on Friday, October 2. U.S. District Judge Martha Pacold granted Kalshi and its partner Coinbase an injunction blocking Illinois from regulating their contracts the way it regulates sportsbooks, the Chicago Sun-Times reported. "Many of the financial instruments at issue are likely swaps as defined by the Commodity Exchange Act — they just happen to be swaps that people find entertaining and fun," Pacold wrote in her opinion. She withheld a decision on Illinois' transaction fees, writing that "taking a cut of Kalshi and Coinbase's profits, without more, might not pose the same conflict as regulating an entire market."

Why it matters

The Illinois ruling breaks a losing streak. InGame reported that it ended a run of 15 consecutive defeats for Kalshi in federal court. The Third Circuit has sided with Kalshi, but most other appellate and district courts have backed states, including a Sixth Circuit decision last month that overturned Kalshi's district court win in Tennessee. Pacold's reasoning was unusually direct: "Whatever the potential for gambling, a swap is a swap," she wrote, according to InGame, and the Commodity Exchange Act requires swaps to trade on designated contract markets beyond state regulation.

That split explains why the Kalshi Missouri talks matter. A negotiated arrangement would offer a path that avoids another round of litigation, but the two sides start far apart. Missouri wants state licensing, state taxes and a 21-plus age limit, while Kalshi's legal position rests on operating under a single federal framework supervised by the Commodity Futures Trading Commission. Pacold's opinion found that Illinois' attempts to control how contracts are structured and "whom Kalshi can allow to buy and sell swaps with age limits and geographical restrictions" were likely preempted, InGame reported. Any concession on age limits in Missouri would cut against that argument.

The federal regulator is moving at the same time. Called It has covered the CFTC's event-contract swap definition rule, and Kalshi's commercial push, including its volume incentive program, has raised the stakes for states that want a share of the activity.

What's next

Missouri's one-month deadline from mid-September has effectively arrived, so the next move by the attorney general's office could come soon: a deal with Kalshi, enforcement against the other five companies, or a lawsuit. In Illinois, the parties must propose the exact terms of Pacold's order, and the court has asked for further briefing on the fees. Above both, the Supreme Court has been asked to consider prediction market cases from the Third and Ninth Circuits, InGame noted. Until it acts, outcomes like the Kalshi Missouri talks will be shaped state by state.