The Commodity Futures Trading Commission (CFTC) has sued Louisiana after a state judge temporarily barred more than 30 prediction market-related companies from operating there, with Chairman Michael S. Selig calling the state’s actions “naked lawfare and a cynical political stunt.”
The lawsuit, announced Friday, marks the 12th state the federal regulator has sued to defend its jurisdiction over derivatives markets and its second such action of the day.
Earlier Friday, the CFTC announced a lawsuit against Arkansas, challenging that state’s efforts to enforce gambling laws against federally regulated prediction markets.
The Louisiana case follows a Thursday ruling by Judge Jeffrey Johnson of the 21st Judicial District Court in Tangipahoa Parish, who granted an emergency temporary restraining order against the prediction market companies.
The order names 31 legal entities associated with 13 brands or corporate groups, including exchanges, brokerages and clearing operations:
- Kalshi: 5 entities
- Polymarket: 5
- Gemini: 4
- Crypto.com: 3
- Underdog: 3
- Robinhood: 2
- Coinbase: 2
- OG.com: 2
- ForecastEx: 1
- Rothera: 1
- Novig: 1
- IG Group: 1
- ProphetX: 1
The order was issued without advance notice to the defendants or an opportunity for them to respond.
Selig accuses Louisiana of ‘naked lawfare’
“Event contracts have traded openly in Louisiana for years, in compliance with the Commodity Exchange Act and CFTC regulations,” Selig said in the agency’s official announcement.
“The state’s eleventh-hour ’emergency’ lawsuit seeking to shut down the entire prediction market industry is naked lawfare and a cynical political stunt. The Commission’s lawsuit seeks to maintain the status quo while the federal courts decide this issue in an orderly manner.”
In its 38-page federal complaint, filed in the Eastern District of Louisiana, the CFTC argues that the state’s enforcement efforts are preempted by federal law and threaten the agency’s exclusive jurisdiction over derivatives traded on federally regulated exchanges.
The filing also highlights Louisiana’s potential penalties, including fines of up to $100,000 and prison sentences of up to five years for certain gambling-by-computer violations.
“Under Louisiana’s newly expanded draconian gambling laws, anyone even tangentially connected to the offering of event contracts within the State faces severe civil and criminal penalties,” the complaint states.
CFTC challenges state restrictions on market access
The agency also argues that Louisiana’s restrictions conflict with federal impartial-access requirements, which it says prohibit federally regulated exchanges from excluding eligible participants based on their state of residence.
The complaint warns that allowing individual states to regulate event contracts could subject exchanges to 50 different regulatory regimes, undermining Congress’s framework for nationwide derivatives markets.
The CFTC is seeking preliminary and permanent injunctions preventing Louisiana from enforcing its gambling laws against event contracts traded on federally regulated exchanges, including Thursday’s temporary restraining order.
The federal action adds to an already crowded legal battle in Louisiana, where Kalshi and Polymarket US have separately challenged state enforcement efforts.
The agency said it has also submitted amicus briefs in four federal appeals courts and one state supreme court as the broader jurisdictional dispute continues.