CFTC Sues Louisiana Over Order Halting Prediction Market Contracts

The Commodity Futures Trading Commission and the Justice Department sued Louisiana on Friday, asking a federal judge to block a state court order that barred more than 30 companies from offering prediction market contracts in Louisiana a day earlier. Louisiana is the 12th state the CFTC has sued over the issue, the agency said.

Crypto firms are on the list. Coinbase, Crypto.com and four Gemini companies are named alongside Kalshi, Polymarket and Robinhood, RG reported from a copy of the order.

A restraining order issued in one evening

Attorney General Liz Murrill sued in Tangipahoa Parish on Nov. 12. That evening, Judge Jeffrey Johnson signed a temporary restraining order, without hearing from the companies, barring them from offering event contracts on sports, elections, awards and other events to anyone in Louisiana without a state gaming license, the federal complaint says. The order lasts 10 days unless extended. A hearing on a longer injunction is set for Nov. 30, WWL-TV reported.

Murrill called the products "unlicensed and unregulated illegal gambling" in an X post announcing the order. The state's gambling-by-computer law carries fines of up to $100,000 and up to five years in prison, the complaint says.

Swap or wager?

An event contract pays out if a stated event happens and nothing if it doesn't. The federal government argues that makes it a swap under the Commodity Exchange Act, which gives the CFTC exclusive jurisdiction over swaps traded on exchanges it registers. If a court agrees, federal law preempts, or overrides, state gambling rules for those trades. Louisiana treats the same contracts as wagers that need a state license.

CFTC Chairman Michael Selig called the state's action "naked lawfare and a cynical political stunt" in the agency's release. The suit "seeks to maintain the status quo while the federal courts decide this issue," he said. The case is No. 26-2612 in the Eastern District of Louisiana.

Kalshi had already sued Murrill in federal court and asked for its own restraining order on Thursday, The Advocate reported. Murrill had posted no response to the federal suit on X by 11:55 p.m. ET Friday. No court has ruled on the merits.

In our opinion: the CFTC isn't starting from zero here. Its complaint says courts have already granted preliminary injunctions blocking state enforcement in Arizona, Illinois and Minnesota. The clock to watch is the order's 10-day life and the Nov. 30 hearing.