The Commodity Futures Trading Commission and the Justice Department sued Louisiana in federal court on Friday, asking a judge to stop the state from enforcing a parish court order that bars Kalshi, Polymarket US, Coinbase, Robinhood and more than two dozen other companies from offering event contracts to people in the state. Louisiana is the 12th state the CFTC has sued over prediction markets, and the case arrives as deadlines in the same fight bunch up over the next two weeks.
What the federal lawsuit asks for
The 38-page complaint, filed in the U.S. District Court for the Eastern District of Louisiana as case No. 2:26-cv-02612, names the state, Attorney General Liz Murrill, the Louisiana Gaming Control Board and its members, the State Police gaming enforcement division, State Police Superintendent Frank Besson and Revenue Secretary Jarrod Coniglio. It argues that event contracts listed on CFTC-registered exchanges are swaps under the Commodity Exchange Act, which gives the agency exclusive jurisdiction, and that Louisiana’s gambling laws are preempted when applied to them.
The government wants a declaratory judgment and a preliminary and permanent injunction that would bar the state from investigating CFTC-regulated firms or enforcing its gambling laws against trades on their exchanges. The request explicitly covers “enforcing or seeking to extend” the temporary restraining order a judge in Tangipahoa Parish signed on Nov. 12.
“The state’s eleventh-hour ’emergency’ lawsuit seeking to shut down the entire prediction market industry is naked lawfare and a cynical political stunt,” CFTC Chairman Michael Selig said in the agency’s announcement. He said the suit “seeks to maintain the status quo while the federal courts decide this issue in an orderly manner.”
Why the state order hit crypto exchanges
Murrill filed her state case on Thursday against 32 entities, including CFTC-registered exchanges, futures commission merchants and clearinghouses, and won an ex parte restraining order that evening without the companies being heard. As we reported on Friday, the order names two Coinbase entities, four Gemini companies and Crypto.com’s derivatives arm alongside Kalshi and Polymarket US, and requires the companies to geofence Louisiana.
The federal complaint spends several pages on what the defendants could face. It points to Act No. 182, enacted on Aug. 1, which widened the state’s “gambling by computer” offence. Under that law, anyone who engages in gambling by computer faces a fine of up to $100,000 and up to five years in prison, and anyone who “knowingly supports or facilitates” it faces up to $20,000 and the same prison term. “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 says.
Selig made a similar point on Friday at the Cantor Convergence conference. “We’re seeing states bring criminal charges, essentially trying to lock up founders and CEOs of these companies that are offering lawful products under a federal regime,” he said, according to The Block. He added that he would rather take the question to the Supreme Court than fight it state by state.
Kalshi drops its own restraining order request
Kalshi’s own case moved on Friday too. The company sued Louisiana officials in the Western District of Louisiana on Oct. 23 and asked for a restraining order on Thursday. At a status conference on Friday, its lawyers orally withdrew the request for a temporary restraining order, according to the court’s minute entry. Both sides agreed to fast-track Kalshi’s motion for a preliminary injunction instead.
The state’s opposition is due on Nov. 18, Kalshi’s reply by Nov. 20, and Judge Jerry Edwards Jr. will hear the motion by video on Nov. 23. The new federal docket also lists a second filing on Friday tied to a restraining order and preliminary injunction, RG reported, though its text was not public.
The calendar to watch
The dates in the Louisiana prediction market fight line up tightly. By its own terms the parish order runs out on Nov. 22, ten days after it was signed, unless the state court extends it or the companies agree to a longer period. Kalshi’s federal hearing is the next day. The state’s own preliminary injunction hearing in Tangipahoa Parish is set for Nov. 30. A ruling on the government’s request in the new federal case could come at any point in that window if a judge moves quickly.
That is why the government’s request to block any extension matters. If a federal judge rules before Nov. 22, Louisiana may be unable to keep the parish order alive until its Nov. 30 hearing. If not, the companies named in the order stay bound by it. The complaint cites federal suits against the state by only two of them, Kalshi and Polymarket US.
The Louisiana filing came a day after the DOJ and CFTC sued Arkansas over its Kalshi case. The complaint lists earlier preemption actions against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, Wisconsin and Utah, and notes that preliminary injunctions against state enforcement have been entered in Arizona, Illinois and Minnesota. The CFTC said it has also filed amicus briefs in four federal appeals courts and one state supreme court.
FAQ
Why did the CFTC sue Louisiana?
To stop the state from enforcing its gambling laws, including a Nov. 12 parish court restraining order, against prediction markets and other firms regulated by the CFTC. The agency says event contracts are swaps under its exclusive jurisdiction.
Which crypto companies are affected?
The parish order names Coinbase, Gemini and Crypto.com entities alongside Kalshi, Polymarket US, Robinhood and others, and requires them to stop offering event contracts to people in Louisiana.
What happens next?
The parish order expires on Nov. 22 unless extended. Kalshi’s preliminary injunction hearing in federal court is on Nov. 23, and the state court hearing is on Nov. 30.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
