- Louisiana obtained an ex parte restraining order against 32 entities accused of facilitating unlicensed event contracts.
- The dispute pits Louisiana gambling-enforcement powers against the CFTC’s claimed authority over federally registered exchanges.
- Federal litigation could force the Fifth Circuit to address a growing split over state regulation of prediction-market contracts.
What the Tangipahoa Order Prohibits
Louisiana Attorney General Liz Murrill’s office filed Louisiana v. Kalshi Inc. et al., No. 20060004268, on Nov. 12 in the 21st Judicial District Court for Tangipahoa Parish. The petition sought an ex parte temporary restraining order, a preliminary injunction and civil penalties against 32 entities. The court granted the restraining order later that day.
As quoted in the federal complaint, the order bars the defendants from “operating, offering, listing, accepting, clearing, settling, brokering, making a market in, or otherwise facilitating or offering any ‘event contract’ (also known as a wager) from, to, or on behalf of any person located in the State of Louisiana without a valid license and permit.”
The order applies to contracts “related to sports, elections, award events, and all others considered sports wagering under La. R.S. 27.” Two elements are particularly significant. The licensing language suggests that a lawful route may exist, but none of the 32 defendants holds a Louisiana gaming licence. As a result, the order functions as an immediate halt rather than a compliance checklist.
The phrase “all others considered sports wagering” also leaves the scope of the order to state regulators instead of resolving whether the contracts’ federal designation controls. That distinction is central to the dispute between Louisiana officials and federally registered prediction-market exchanges.
Federal Litigation Was Already Underway
Louisiana’s state-court action followed several federal cases. Two CFTC-registered exchanges had already sued Murrill in Louisiana: QCX LLC filed in the Eastern District under No. 26-2482, while KalshiEX LLC filed in the Western District under No. 26-cv-4476.
Kalshi sought a temporary restraining order and preliminary injunction in its federal case on Nov. 12, the same day Louisiana filed in Tangipahoa Parish. The state petition therefore arrived while Kalshi’s federal request was still pending.
The next day, the commission and the Justice Department filed their own action in the Eastern District. The case names Louisiana, Murrill, the Louisiana Gaming Control Board, board chairperson Christopher B. Hebert and its members, the State Police’s Gaming Enforcement Division, Superintendent Frank J. Besson and Revenue Secretary Jarrod J. Coniglio.
The breadth of that defendant list reflects the federal government’s strategy. The action targets not only one prosecutor but every Louisiana office with authority to investigate, cite, enjoin or freeze accounts associated with event-contract trading.
Criminal and Civil Penalties Raise the Stakes
The consequences of Louisiana’s position extend beyond administrative enforcement. Act No. 182 of the 2026 regular session took effect Aug. 1 and expanded the state criminal code’s definition of “gambling by computer.” The revised provision covers internet and mobile games that use a dual-currency system and simulate gambling.
The commission’s complaint states that gambling by computer can carry a fine of up to $100,000 and as many as five years in prison. Anyone who “knowingly supports or facilitates” the operation may face a fine of up to $20,000 and the same potential prison term.
Louisiana’s civil enforcement tools operate alongside those criminal penalties. Under the statutes cited in the complaint, the attorney general can issue cease-and-desist notices, open investigations, seek injunctions, restrict access to websites and ask courts to freeze bank or credit accounts connected to the alleged activity.
For exchanges, brokers, clearing firms and payment partners, the immediate concern is operational. A company affected by a freeze order could have only hours to decide whether it can continue servicing Louisiana customers while the broader legal challenge proceeds.
Fifth Circuit Could Confront Federal-State Split
The commission’s principal argument is jurisdictional rather than factual. It relies on 7 U.S.C. § 2(a)(1)(A), which grants the CFTC exclusive jurisdiction over futures, options and swaps traded on registered exchanges, and treats event contracts as swaps.
In September, the Sixth Circuit held that Kalshi had not shown its sports-event contracts satisfied the statutory definition of a swap. The panel also said that, even if the contracts qualified as swaps, the Commodity Exchange Act neither expressly nor impliedly preempted Ohio’s or Tennessee’s gambling laws. That decision allowed the two states to regulate Kalshi under their own gaming statutes.
The Third Circuit has taken a different approach. The complaint cites KalshiEX, LLC v. Flaherty, 172 F.4th 220 (3d Cir. 2026), as well as district court injunctions in Illinois and Minnesota, as evidence that federal courts have repeatedly blocked state enforcement against registered exchanges.
Louisiana is within the Fifth Circuit, which has not yet ruled on the issue. The Tangipahoa order could accelerate the circuit’s consideration of whether state gambling laws can be applied to event contracts traded on CFTC-regulated exchanges.
What the Federal Complaint Seeks
The federal complaint requests a declaratory judgment that Louisiana’s laws are preempted and invalid as applied to transactions on CFTC-regulated exchanges. It also seeks preliminary and permanent injunctions preventing the state from investigating or enforcing those laws.
The requested relief specifically includes an order blocking Louisiana from enforcing or extending the Tangipahoa restraining order. The commission also seeks costs but does not request damages.
That limitation focuses the case on regulatory authority rather than the economic purpose of individual contracts. A ruling on preemption could come before the state proceeding reaches a final judgment, while a dispute over whether a sports contract serves a hedging purpose could require substantially longer factual litigation.
The commission has separately been developing its regulatory position. It opened public comment on Oct. 19 on proposed event-contract rules published at 91 Fed. Reg. 65,969 and 91 Fed. Reg. 66,022. Those measures remain proposals, not final rules, and do not resolve the questions before the courts.
Nor does the parish order resolve them. An ex parte restraining order is an interim measure issued on one side’s filings. It does not establish that Louisiana’s gambling laws apply to federally designated contracts, and the Sixth Circuit’s decision leaves the Fifth Circuit free to reach either side of the split.
A Coordinated Campaign Across 17 Forums
The Louisiana case forms part of a broader campaign. The commission has sued 12 states, and its Utah filing on Oct. 27 illustrates the increasingly familiar sequence: a state is named, the commission seeks declaratory and injunctive relief, and the court is asked to preserve the existing market position.
The commission has also filed amicus briefs in four federal Courts of Appeal and one state Supreme Court. Together, those lawsuits and briefs place the same regulatory question before 17 separate federal and state forums.
Louisiana demonstrates how quickly a state proceeding can affect the market. One petition in one parish court reached 32 entities in a single evening, including brokers and clearing houses that are not defendants in any of the 12 federal lawsuits. Federal cases, by contrast, can take months to produce an initial ruling.
Act No. 182 took effect on Aug. 1, and the Tangipahoa restraining order followed on Nov. 12—103 days later. During that period, Louisiana converted a statutory change into an operating restriction, while the commission’s longer-running federal campaign still has no final appellate resolution.
The financial exposure is also asymmetric. The federal complaint seeks no money, while the challenged Louisiana statute authorizes fines of up to $100,000 per person for the underlying conduct, along with possible imprisonment.
Next Legal Signals
The next developments are likely to include a hearing in the 21st Judicial District Court on whether the temporary restraining order should become a preliminary injunction. That proceeding would place Louisiana’s licensing condition before a state judge on a more developed record.
A federal ruling in the Eastern District is another important step, particularly if the Fifth Circuit considers an expedited appeal. The 31 other defendants must also decide whether to continue serving Louisiana users while the federal court weighs the conflict between state enforcement and federal regulation.
Commission Chairman Michael S. Selig framed the federal filing as an institutional dispute rather than a market-harm claim. “Event contracts have traded openly in Louisiana for years, in compliance with the Commodity Exchange Act and CFTC regulations,” he said in the announcement.
Selig described the state action as an “eleventh-hour ’emergency’ lawsuit seeking to shut down the entire prediction market industry,” calling it “naked lawfare and a cynical political stunt.” He summarized the commission’s requested relief this way: “The Commission’s lawsuit seeks to maintain the status quo while the federal courts decide this issue in an orderly manner.”
Why This Matters
The Louisiana dispute could determine how prediction markets operate when state gambling laws conflict with the federal framework governing registered derivatives exchanges. The case also shows how a state-level order can immediately involve exchanges, brokers, clearing firms and payment providers beyond the parties named in existing federal litigation.
For event-contract users in Louisiana, the practical question is whether platforms will continue accepting or settling trades while the legal challenges proceed. For regulators and exchanges, the broader issue is whether the CFTC’s claimed jurisdiction prevents states from applying gambling restrictions to contracts involving sports, elections and award events.
The upcoming state-court hearing, the Eastern District ruling and any subsequent Fifth Circuit review will provide the clearest indications of whether Louisiana’s enforcement effort remains in place and how the circuit will approach the national split.
Frequently Asked Questions
What does Louisiana’s restraining order prohibit?
It bars 32 defendants from operating, offering, listing, accepting, clearing, settling, brokering, making a market in or otherwise facilitating event contracts for people located in Louisiana without a valid licence and permit.
Why is the CFTC challenging Louisiana?
The commission argues that federally registered exchanges fall under its exclusive jurisdiction for futures, options and swaps, and that Louisiana’s gambling laws are preempted when applied to those transactions.
What happens next?
The 21st Judicial District Court is expected to consider whether the temporary restraining order should become a preliminary injunction. A separate federal ruling in the Eastern District could then be reviewed by the Fifth Circuit.
