A fight over who controls U.S. prediction markets escalated after the Commodity Futures Trading Commission and the U.S. government sued Louisiana in federal court to halt a state order affecting 31 operators, including Kalshi and Polymarket.

The lawsuit came one day before Louisiana Attorney General Liz Murrill publicly attacked CFTC Chairman Michael Selig, accusing him of making “flatly false statements” after he argued that event contracts had been available in the state for years under federal commodities law and CFTC rules.

Federal lawsuit challenges Louisiana action

On Friday, 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 the gaming enforcement division of state police. The agency is asking the court to rule that state gambling laws are preempted when it comes to CFTC-regulated markets and to block Louisiana from enforcing or expanding the state court order.

Selig said the federal case is intended to preserve the status quo while courts resolve the jurisdictional dispute. According to the agency, Louisiana is the 12th state it has sued as it defends what it describes as its exclusive authority over derivatives markets.

Attorney general disputes CFTC chairman

On Saturday, Murrill responded on X to comments Selig had posted the previous evening. She called his remarks “flatly false statements” and described him as an “obsequious standard bearer” for Kalshi and prediction markets.

Her post answered Selig’s claim that event contracts “have traded openly in Louisiana for years, in compliance with the CEA and [CFTC] regulations.” In the same Friday post, Selig said Louisiana’s last-minute emergency case against the industry amounted to “naked lawfare and a cynical political stunt.” Murrill countered by arguing that gambling has been regulated by states for 250 years.

State court order names 31 companies

The immediate dispute centers on a temporary restraining order signed Thursday afternoon by Judge Jeffrey Johnson of the 21st Judicial District Court in Tangipahoa Parish, according to a copy Murrill posted on X. Murrill had sued the companies earlier that day, making Louisiana the 11th state to take action against one or more prediction-market operators.

The order covers 31 entities connected to Kalshi, Polymarket, Robinhood, Crypto.com, Coinbase, Gemini, Interactive Brokers’ ForecastEx, Novig, Underdog, IG Group and ProphetX. It bars them from offering event contracts tied to sports, elections, awards and other outcomes to people in Louisiana unless they hold a state license, and it requires geofencing of the state.

Access already cut off as next hearing approaches

Kalshi has already blocked users in Louisiana. A message shown in its app and reviewed by The Block tells affected users, “Your government says you can't use Kalshi anymore,” and says the state acted “without a hearing, notice, or due process.” The screen also includes a link labeled “Protect your freedom to trade” and a button saying “Join the movement.”

The temporary restraining order expires after 10 days unless it is extended by the court. A hearing on Louisiana’s request for a preliminary injunction is scheduled for 9 a.m. local time on Nov. 30, making that the next confirmed step in a widening battle between state gambling enforcement and the CFTC’s position on federally regulated event contracts.

Source: www.theblock.co