1. Washington moves against Louisiana's prediction markets order
The Commodity Futures Trading Commission (CFTC) and the US Department of Justice filed suit against the State of Louisiana on November 13, 2026, asking a federal judge to strike down a state court order that blocks prediction markets from serving Louisiana residents. The order, won by Attorney General Liz Murrill a day earlier, covers roughly 30 entities, including Kalshi, Polymarket, Robinhood and Coinbase.
The federal complaint was filed in the US District Court for the Eastern District of Louisiana. It asks the court to declare that the state cannot use its gambling laws to shut down event contracts that trade on exchanges regulated by the CFTC, and to confirm that the agency's oversight of those products rests on the Commodity Exchange Act, the statute that governs derivatives trading across the United States.
The case is the latest and sharpest round in a fight over who gets to police Louisiana prediction markets, and more broadly over whether contracts tied to sports, elections and other real-world events are financial instruments or a form of betting. Louisiana is now the twelfth state the CFTC has taken to court in defense of its authority over these products.
2. How the state court order came about
Murrill opened the latest chapter on Thursday, November 12, when she filed a lawsuit in state court against roughly 30 companies and affiliated entities that offer event contracts. The suit was brought in the 21st Judicial District Court in Tangipahoa Parish, and a judge granted a temporary restraining order the same day.
Under that order, the named companies may not offer event contracts to people located in Louisiana unless they hold the gambling licenses the state requires of betting operators. In practice, that means platforms have to wall off the state from their services until the dispute is resolved or the order lapses.
An event contract is a simple instrument on its face. A buyer pays for a position that settles at a fixed value if a specified outcome happens, such as a team winning a game, a candidate winning an election or an economic figure landing above a certain level, and settles at zero if it does not. Supporters describe these markets as a way to price information and hedge real exposures. Critics, including many state gambling regulators, see them as sports betting delivered through a derivatives exchange.
Among those covered by the order are KalshiEX LLC, the operator of the Kalshi exchange, along with Polymarket US, Robinhood Markets and entities tied to Coinbase. The breadth of the list shows how quickly event contracts have spread from a handful of specialist venues into mainstream trading apps.
3. Why the CFTC says federal law controls
The federal government's case rests on preemption, the constitutional principle that a valid federal law overrides state rules that conflict with it. The CFTC and the Justice Department argue that event contracts listed on CFTC-regulated exchanges fall under the Commodity Exchange Act, and that the act places those markets under federal supervision rather than the patchwork of state gambling codes.
If that view prevails, a state could not require a federally registered exchange to obtain a local gambling license before offering its contracts, and it could not use its own courts to cut off access to those products. If the state view prevails, every federally supervised exchange offering sports or election contracts could face a separate licensing regime, and potential shutdowns, in each state that classifies the activity as gambling.
CFTC Chairman Michael Selig framed Louisiana's action as something other than routine enforcement. He argued that event contracts have traded legally in Louisiana for years under the agency's rules, and that the state's sudden move to block them is a disguised attack on federal authority. Selig called the state's lawsuit naked lawfare and a cynical political stunt, accusing Louisiana of using the courts to pursue a political goal.
4. Liz Murrill answers the CFTC chairman
Murrill did not let the charge stand. On Saturday, a day after the federal complaint was filed, she rejected Selig's description of events and turned the criticism back on him personally. She called his statements flatly false and described him as an obsequious standard bearer for Kalshi and the prediction markets industry, suggesting the agency head is acting as an advocate for the companies he is meant to oversee.
The exchange marks a change in tone. Disputes between federal and state authorities over market jurisdiction are common, but they are usually argued in legal briefs rather than in public attacks between a federal agency chief and a state's top law enforcement officer.
Murrill's substantive argument is grounded in history. States have regulated gambling for as long as the country has existed, she contends, and that long tradition gives Louisiana the authority to decide who may take wagers from its residents. She has said gambling has been regulated by states for 250 years, and her position is that a contract paying out on the result of a football game is a bet regardless of the platform that offers it.
5. What are Louisiana prediction markets fighting over?
At its core, the Louisiana prediction markets dispute is about classification. If event contracts are derivatives, they belong to the CFTC and the federal framework built around the Commodity Exchange Act. If they are wagers, they fall within the long-established power of states to license and tax gambling.
The line is hardest to draw for sports and election contracts. A contract on interest rates or crop yields looks much like a traditional futures product, used by businesses to manage risk. A contract on whether a particular team covers a point spread looks, to many regulators, like the same product a licensed sportsbook offers. That is why state gambling authorities have been most protective in exactly these categories, and why the fight has intensified as sports contracts have become one of the largest sources of volume for prediction market platforms.
The money at stake for states is also significant. Licensed sportsbooks pay fees and taxes and operate under state consumer protection rules. When economically similar products are offered under a federal derivatives license instead, that activity sits outside the state licensing system, which gives states both a regulatory and a fiscal reason to push back.
6. Louisiana shifts from defense to offense
The state court action represents a change in strategy. Before the federal government stepped in, Kalshi had already sued Louisiana officials, with Murrill as the lead defendant, in federal court in the Western District of Louisiana, seeking to block the state from enforcing its gambling laws against it. In that kind of case, the platform sets the terms and the state responds.
By going to its own courts and obtaining an order that took effect immediately, Louisiana reversed that dynamic. Rather than waiting for federal judges to rule on the platforms' claims, the state created facts on the ground: the companies were cut off from Louisiana customers first, and the legal questions are being argued afterward.
That approach puts pressure on the platforms and on the CFTC. Each day the order stays in place, the companies lose access to a market, and the federal government is left seeking to undo a restriction instead of defending the status quo. Selig has said the federal lawsuit is meant to maintain the status quo while courts sort out the jurisdictional question.
7. Why crypto firms are watching the case
The case is not only a gambling matter. Coinbase, the largest US-listed crypto exchange, and Polymarket, a platform that grew out of the crypto sector, are among the companies covered by the Louisiana order. Both have expanded into event contracts as a way to broaden their products beyond digital asset trading, and the outcome of the jurisdiction fight will shape how far they can take that business.
Robinhood's inclusion carries a different message. The brokerage built its customer base on commission-free stock and crypto trading for retail investors, and its move into prediction products shows how far event contracts have travelled from niche venues into mainstream finance apps used by millions of people.
For all of these companies, the immediate cost is simple: lost access to Louisiana customers for as long as the order holds. The longer-term question is whether they will have to manage a separate set of state rules, or exit states altogether, if courts side with the states in this and similar cases.
8. A wider federal campaign against the states
Louisiana is far from the only state to challenge prediction markets, and the CFTC has shown it is willing to sue to defend its turf. With this filing, the agency has now gone to court against twelve states over their attempts to regulate or restrict event contracts.
Each of these cases tests the same legal theory, and rulings in one court can influence others. A string of decisions favoring federal preemption would strengthen the hand of exchanges nationwide, while decisions favoring the states could encourage more attorneys general and gaming boards to follow Louisiana's path of seeking quick restraining orders in state courts.
The pattern also highlights how unusual the moment is. A federal market regulator suing a dozen states over the reach of its authority is a rare event, and it reflects how quickly prediction markets have grown from a small corner of the derivatives world into a mass-market product that competes directly with state-licensed sportsbooks.
9. What happens next in the Louisiana prediction markets case
The next scheduled milestone is in state court, where a hearing on Louisiana's request for a preliminary injunction is set for November 30. That hearing will determine whether the temporary restraining order is replaced by a longer-lasting restriction on the platforms while the case proceeds.
Meanwhile, the federal court in the Eastern District of Louisiana will weigh the CFTC and Justice Department's request to void the state order and confirm federal oversight. Kalshi's separate federal case against Louisiana officials also remains pending.
How these proceedings unfold will matter well beyond Louisiana. A clear federal ruling could deter other states from seeking similar orders, while a win for the state could provide a template for gambling regulators across the country. Either way, the confrontation between Selig and Murrill suggests the battle over prediction markets is becoming more political, and that a final answer may ultimately come from higher courts or from Congress.