Louisiana Wins Temporary Order Against Prediction Markets - DeFi Rate

Louisiana sued a broad group of prediction market operators Thursday and secured a temporary restraining order hours later, escalating the jurisdictional fight from a threatened crackdown to a court-ordered restriction. Judge Jeffrey Johnson of the 21st Judicial District Court in Tangipahoa Parish temporarily barred the named companies from offering or facilitating covered event contracts for people in Louisiana without state gaming authorization.

The order also requires geofencing and restricts representations that the products are lawful or licensed in the state. Johnson's order came just hours after Attorney General Liz Murrill filed a lawsuit against 10 prediction markets operators in state court. The restriction reaches beyond sports to contracts involving elections and awards.

Louisiana targets the full transaction

Murrill's lawsuit argues that the platforms are offering unlicensed gambling, regardless of whether they describe the products as financial contracts. "It's not complicated: if you aren't a licensed gaming operator, you aren't legal," Murrill said. "Illegal gambling is a crime and is subject to jail time and significant penalties."

The restraining order takes a broad approach. It prohibits named defendants from operating, offering, listing, accepting, clearing, settling, brokering, making markets in or otherwise facilitating covered event contracts for anyone located in Louisiana without the required state license and permit.

It also bars accepting wagers from, or allowing covered market access to, people in Louisiana, requires geofencing to prevent access within the state, and prohibits representations to Louisiana customers that the covered offerings are lawful, licensed or authorized there.

Kalshi asks a federal court to block the state

Kalshi responded Thursday by seeking its own temporary restraining order and preliminary injunction in federal court. The exchange had already sued Murrill, Gov. Jeff Landry and Louisiana gaming officials Oct. 23, arguing that the state was preparing to interfere with a federally regulated market.

The new emergency request asks the federal court to stop Louisiana's enforcement. "The operation of federally-regulated exchanges is the exclusive province of the federal government. Full stop," Kalshi Head of Litigation Jovy Dedaj wrote on X.

Kalshi argues that the Commodity Exchange Act and Commodity Futures Trading Commission (CFTC) jurisdiction displace Louisiana gambling restrictions. Murrill argues that the contracts are wagers subject to state authorization.

National access dispute becomes immediate problem

The Louisiana order arrives shortly after the CFTC directed regulated exchanges to address domestic geographic restrictions. The agency's impartial access interpretation gives designated contract markets 30 days to remove restrictions that violate federal requirements or explain why compliance is not feasible.

Louisiana's order pushes in the other direction by expressly requiring a geographic block. The CFTC interpretation does not vacate state-court injunctions, making this an immediate compliance problem for operators.

Divided national fight continues

Kalshi's federal Louisiana case sits within the Fifth Circuit. Other appellate courts have reached differing conclusions. The Third Circuit sided with Kalshi in New Jersey, while the Ninth Circuit ruled against the exchange in Nevada and denied rehearing Nov. 4.

The Sixth Circuit rejected preliminary protection in Ohio and Tennessee cases. The Second Circuit also denied injunctions pending appeal Nov. 3 in Kalshi's New York and Connecticut cases and Coinbase's Connecticut case, without deciding those appeals on the merits.

The next confirmed state-court date is the Nov. 30 preliminary injunction hearing. Before then, the key questions are whether the 10-day TRO is extended, whether defendants challenge or seek to modify it, and whether the federal court grants Kalshi emergency relief.