The temporary restraining order, issued on November 12, covers 31 entities and requires affected platforms to prevent Louisiana residents from accessing specified event-contract markets without the necessary state licenses. A hearing on Louisiana’s request for a longer-lasting injunction is scheduled for November 30.
Why Did Louisiana Order Prediction Markets to Block Customers?
Judge Jeffrey Johnson of Louisiana’s 21st Judicial District Court granted an emergency restraining order after Murrill filed an enforcement action against prediction market businesses operating in the state.
The order prohibits affected entities from offering, listing, clearing, settling, brokering or facilitating certain event contracts for Louisiana customers without state authorization. It covers contracts tied to sports, elections, entertainment awards and other events falling within the state’s gambling restrictions.
The defendants include businesses associated with Kalshi, Polymarket, Robinhood, Coinbase, Crypto.com, Gemini, Interactive Brokers’ ForecastEx, IG Group, Underdog, Novig and ProphetX.
As FinanceFeeds previously reported, Louisiana initiated its enforcement action on November 12, alleging that prediction market operators were offering gambling products without complying with state licensing requirements.
The court issued its order without first hearing from the defendants. The restrictions are temporary and do not constitute a final determination that the companies violated Louisiana law.
Kalshi has already restricted customer access in Louisiana. Its application displays a notice informing users that the state has prevented them from using the platform and provides a link to an advocacy campaign challenging the restrictions.
The order is set to expire after 10 days unless extended, modified or replaced by further judicial relief.
Investor Takeaway
The immediate financial risk is restricted market access rather than a final regulatory penalty. Geofencing prevents affected platforms from generating new event-contract transactions from Louisiana customers, while the breadth of the order also creates compliance obligations for brokers, clearing firms and other intermediaries.
What Did the CFTC Ask the Federal Court to Do?
On November 13, the CFTC and the United States filed a complaint in the U.S. District Court for the Eastern District of Louisiana against the state, Murrill, the Louisiana Gaming Control Board and other state officials.
The federal government is seeking declaratory and injunctive relief to prevent Louisiana from enforcing gambling restrictions against event contracts offered through federally regulated derivatives markets.
The complaint argues that event contracts qualify as swaps under the Commodity Exchange Act, which grants the CFTC exclusive jurisdiction over covered derivatives transactions.
Federal authorities also argue that Louisiana’s emergency order interferes with registered exchanges, futures commission merchants and derivatives clearing organizations operating under federal supervision.
Selig described the state’s action as “naked lawfare” and said the federal lawsuit was intended to preserve existing market operations while courts determine which regulatory framework applies.
Murrill responded on November 14, accusing the chairman of making “flatly false statements” and calling him an “obsequious standard bearer” for prediction markets.
The attorney general maintains that Louisiana retains authority to enforce its gambling laws, including against event contracts that state officials consider unlawful wagering products.
The competing claims have not been resolved. The CFTC’s assertion of exclusive jurisdiction does not automatically prevent state enforcement while federal litigation proceeds.
How Does the Louisiana Case Affect Other States?
The CFTC said Louisiana is the 12th state it has sued to defend its claimed jurisdiction over federally regulated derivatives markets.
The agency’s action followed a separate federal lawsuit against Arkansas on November 12. That case, covered by FinanceFeeds, seeks to prevent Arkansas Attorney General Tim Griffin from enforcing state gambling restrictions against Kalshi.
The Louisiana dispute is broader in its immediate operational impact because the emergency order covers multiple exchanges, brokerage platforms and clearing-related entities rather than a single prediction market operator.
The litigation also follows criminal charges against Kalshi executives in Utah, which have prompted criticism from Selig. As FinanceFeeds reported on November 14, the CFTC chairman has argued that disputes over the legal classification of event contracts should be resolved through judicial proceedings rather than the threat of imprisonment.
For companies distributing prediction market contracts through conventional trading applications, the disagreement creates uncertainty over whether federal exchange registration is sufficient to serve customers in every state.
Investor Takeaway
Louisiana’s order extends operational risk beyond standalone prediction exchanges to companies distributing or clearing their contracts. A broader application of state gambling restrictions could require additional geographic controls and complicate nationwide product distribution.
What Happens at the November 30 Hearing?
The Louisiana state court has scheduled a hearing for November 30 at 9 a.m. local time to consider the attorney general’s request for a preliminary injunction.
Unlike the temporary restraining order, a preliminary injunction could maintain restrictions on affected event-contract activities while the underlying litigation continues.
The federal proceedings could also affect the restrictions before that hearing. The CFTC is seeking relief against enforcement of the state court’s order, while Kalshi and Polymarket have pursued separate federal challenges to Louisiana’s regulatory position.
Neither the state enforcement action nor the federal lawsuit has established a final nationwide rule determining whether all federally regulated event contracts are exempt from state gambling laws.
Investor Takeaway
The November 30 hearing is the next scheduled milestone in Louisiana’s state proceedings, but federal courts could intervene sooner. For market operators, the practical outcome will depend on whether restrictions remain enforceable and whether companies can restore customer access without obtaining separate state licenses.
