The fight between US states and prediction markets has pulled in some of the best-known names in retail trading, after Louisiana won a court order shutting event contracts out of the state and Washington’s derivatives regulator went to court to stop it.
The Commodity Futures Trading Commission (CFTC) said on Friday, 13 November, that it had filed a lawsuit against Louisiana to block the state from prohibiting event contracts offered by CFTC-regulated exchanges, futures commission merchants and clearing houses.
The complaint, brought jointly with the US Justice Department, was filed in the US District Court for the Eastern District of Louisiana.
“Event contracts have traded openly in Louisiana for years, in compliance with the Commodity Exchange Act and CFTC regulations,” CFTC chairman Michael Selig said.
He called the state’s “eleventh-hour ‘emergency’ lawsuit” an attempt “to shut down the entire prediction market industry”, adding that the Commission wanted “to maintain the status quo while the federal courts decide this issue in an orderly manner”.
The CFTC said Louisiana is the 12th state it has sued to defend what it describes as its exclusive jurisdiction over derivatives markets.
What the Louisiana order does
Louisiana Attorney General Liz Murrill, sued the operators in state court on Thursday, 12 November, arguing that event contracts are wagers that need a state gaming licence. Hours later, Judge Jeffrey Johnson of the 21st Judicial District Court in Tangipahoa Parish signed a temporary restraining order. It was granted ex parte, without the companies being heard.
According to the CFTC’s complaint, the order bars defendants from “operating, offering, listing, accepting, clearing, settling, brokering, making a market in, or otherwise facilitating or offering any ‘event contract’” to anyone in Louisiana without a state licence. It covers contracts tied to sports, elections and awards. Legal Sports Report, which reviewed the order, said it also requires operators to geofence the state.
“It’s not complicated: if you aren’t a licensed gaming operator, you aren’t legal,” Murrill wrote on X.
Brokers and crypto exchanges in the frame
According to Legal Sports Report, the order names 31 entities tied to 13 brands, including the brokerage and clearing arms of several mainstream platforms.
Alongside Kalshi and Polymarket’s US business, the list includes Robinhood Markets and Robinhood Derivatives; Coinbase Global and Coinbase Financial Markets; Crypto.com operator Foris and its North American Derivatives Exchange; four Gemini entities; ForecastEx, the prediction market run by Interactive Brokers; and IG Group Holdings, the London-listed owner of US broker tastytrade.
Readers can find more on how two of those platforms work in our Robinhood review and Coinbase review.
The federal case
The federal government argues that event contracts are swaps under the Commodity Exchange Act, so state gambling laws are pre-empted where those contracts trade on CFTC-regulated markets.
It is asking the court for a declaratory judgment and an injunction barring Louisiana from enforcing state law against those markets, including by seeking to extend the Tangipahoa order.
What happens next
The state order lasts 10 days unless extended, and a hearing on Louisiana’s request for a preliminary injunction is scheduled for 30 November.
The case adds to growing state pressure on the sector. More than a dozen states have taken legal action against Kalshi, Polymarket and other prediction market companies, according to The Times-Picayune | The New Orleans Advocate, and Utah filed criminal charges against Kalshi and its co-founders in October.
For US brokers that have added event contracts to their apps, the immediate question is whether a state can switch off a federally regulated product overnight. A federal judge in Louisiana may now be the first to answer it for this state.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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