CFTC Asks Federal Court to Void Louisiana's Order Against 32 Prediction-Market Firms

The CFTC and the Justice Department sued Louisiana on Nov. 13 to void a restraining order that shut 32 prediction-market firms out of the state in a single evening. The federal complaint, filed in the Eastern District of Louisiana, names Attorney General Liz Murrill, the Louisiana Gaming Control Board, its chairperson Christopher B. Hebert, the State Police's Gaming Enforcement Division, Superintendent Frank J. Besson and Revenue Secretary Jarrod J. Coniglio. That defendant list is the tell. The suit targets every state office with power to investigate, cite, enjoin or freeze accounts tied to event-contract trading.

What the Tangipahoa Order Actually Prohibits

Murrill's office filed the underlying petition on Nov. 12 as Louisiana v. Kalshi Inc. et al., No. 20060004268, in the 21st Judicial District Court for Tangipahoa Parish. It sought an ex parte temporary restraining order, a preliminary injunction and civil penalties against 32 entities. The court granted the restraining order that evening.

The order's operative language bars defendants from "operating, offering, listing, accepting, clearing, settling, brokering, making a market in, or otherwise facilitating or offering any 'event contract' (also known as a wager) from, to, or on behalf of any person located in the State of Louisiana without a valid license and permit." It covers contracts "related to sports, elections, award events, and all others considered sports wagering under La. R.S. 27."

Two details carry most of the weight. The licensing condition implies a lawful path exists, but none of the 32 defendants holds a Louisiana gaming licence — in practice, a stop, not a checklist. And the phrase "all others considered sports wagering" hands the scope question to state regulators rather than to the contract's federal designation.

Three Federal Cases Were Already Running

The state did not act in a vacuum. Two CFTC-registered exchanges had already sued Murrill in federal court in Louisiana: QCX LLC in the Eastern District, No. 26-2482, and KalshiEX LLC in the Western District, No. 26-cv-4476. On Nov. 12, the same day the state filed in Tangipahoa, Kalshi moved for a temporary restraining order and preliminary injunction in its federal case. The Tangipahoa petition landed while that motion was pending.

The stakes behind the order are criminal, not administrative. Louisiana's Act No. 182 of the 2026 regular session, effective Aug. 1, expanded "gambling by computer" in the criminal code to cover internet and mobile games using a dual-currency system that simulates gambling. The CFTC's complaint states that engaging in gambling by computer carries a fine of up to $100,000 and up to five years imprisonment; knowingly supporting or facilitating it carries up to $20,000 and the same potential prison term.

Civil tools run alongside: cease-and-desist notices, investigations, injunctions, website blocking and court orders freezing bank or credit accounts. For an exchange, that is an operational risk before it is a legal one. A clearing firm or payment partner caught inside a freeze order must decide within hours whether to keep servicing Louisiana customers.

What Does the Preemption Fight Turn On?

The commission's core argument is jurisdictional. It relies on 7 U.S.C. § 2(a)(1)(A), which gives the CFTC exclusive jurisdiction over futures, options and swaps traded on registered exchanges, and treats event contracts as swaps.

The circuits are split. In September, the Sixth Circuit held Kalshi had not shown its sports-event contracts meet the statutory definition of a swap, and that the Commodity Exchange Act neither expressly nor impliedly preempts Ohio's or Tennessee's gambling laws. The Third Circuit went the other way: the complaint cites KalshiEX, LLC v. Flaherty, 172 F.4th 220 (3d Cir. 2026), plus district court injunctions in Illinois and Minnesota, as evidence federal courts have repeatedly blocked state enforcement against registered exchanges. Louisiana sits in the Fifth Circuit, which has not ruled. The parish order gives that court a reason to take the question up sooner than it otherwise would.

The requested relief is narrow in an instructive way. The complaint asks for a declaratory judgment that Louisiana's laws are preempted as applied to CFTC-regulated exchanges, a preliminary and permanent injunction barring state enforcement, an order specifically blocking the Tangipahoa restraining order, and costs. It asks for no damages. A preemption ruling can arrive long before a state case reaches judgment.

Twelve States, Seventeen Forums, 103 Days

The arithmetic of the campaign is stark. The CFTC has sued twelve states; its Utah filing of Oct. 27 shows how routine the sequence has become. It has also filed amicus briefs in four federal Courts of Appeal and one state Supreme Court — seventeen separate forums litigating the same question.

Louisiana shows what the state route can do that the federal one cannot. One petition in one parish court reached 32 entities in a single evening, including brokers and clearing houses that are not parties to any of the twelve federal suits. Measured from Act No. 182 taking effect on Aug. 1 to the Nov. 12 restraining order, the state needed 103 days to convert a statute into an operating restriction.

CFTC Chairman Michael S. Selig framed the filing in institutional terms. "Event contracts have traded openly in Louisiana for years, in compliance with the Commodity Exchange Act and CFTC regulations," he said. He called the state's action an "eleventh-hour 'emergency' lawsuit seeking to shut down the entire prediction market industry," describing it as "naked lawfare and a cynical political stunt," and summarized the request plainly: "The Commission's lawsuit seeks to maintain the status quo while the federal courts decide this issue in an orderly manner."

The next signals are specific: a hearing in the 21st Judicial District Court on whether the restraining order becomes a preliminary injunction, a possible expedited Fifth Circuit review of an Eastern District ruling, and the choices of the other thirty-one defendants on whether to keep serving Louisiana users while the federal question is decided.