KEY TAKEAWAYS
- Kalshi sued Louisiana in federal court on Oct. 23, extending the prediction markets litigation battle into Fifth Circuit territory for the first time.
- The company pointed to the state’s new illegal gambling laws, which criminalize all unauthorized “gambling by computer.”
- Kalshi argued that Louisiana officials would violate federal law by seeking to shut down sports event contracts, and asked the court for injunctions against the state.
Kalshi pre-emptively sued Louisiana in federal court on Friday, Oct. 23, arguing that the state showed a “clear intention to violate the Supremacy Clause” by trying to shut down prediction markets.
The complaint filed in the U.S. District Court for the Western District of Louisiana names numerous defendants, including:
- Attorney General Liz Murrill
- Gov. Jeff Landry
- Louisiana Gaming Control Board (LGCB) Chair Christopher Hebert
- LGCB Gaming Division Director Dawn Himel
- The Louisiana State Police Gaming Enforcement Division
Kalshi asked the court for a temporary restraining order and preliminary and permanent injunctions to stop Louisiana from taking enforcement action against the firm’s sports event contracts.
Louisiana lawsuit takes prediction markets battle into Fifth Circuit territory
Kalshi’s lawsuit cited several Louisiana enforcement efforts, public statements, and court filings since late last year as evidence that state officials “will imminently bring an enforcement action with the intent to bar Kalshi from offering event contracts.”
As one example, it included as an exhibit a letter Hebert sent to LGCB’s licensed sportsbooks in December 2025, in which the regulator warned operators that offering prediction markets on sports breaks state law and may impact their gaming licenses.
“It is the board’s position that such activities constitute sports wagering under Louisiana law,” wrote Hebert. “Any event-style ‘contract,’ ‘swap,’ ‘market’ or other ‘financial instrument’ that allows individuals to stake value on the outcome of a sporting event, other than by a Board licensed or permitted sports wagering operator, constitutes illegal gambling.” Hebert added that not only do sports contracts fit Louisiana’s legal definition of gambling, but a statute also specifies that “exchange wagering” is a type of sports wagering.
The lawsuit extends the prediction markets litigation war into the Fifth Circuit’s jurisdiction for the first time, amid continued cases in other federal appeals courts including the Third, Sixth, and Ninth Circuits.
Is Kalshi threatened by Louisiana’s new ‘gambling by computer’ law?
Kalshi also prominently referenced the new Louisiana law that went into effect in August 2026 that criminalizes any digital gambling that has not been expressly authorized by the state. Louisiana’s legislature passed two illegal gambling bills in 2026, House Bill 53 and House Bill 883. Gov. Landry signed both in May, and each of them took effect on Aug. 1.
- HB 883 made it a crime to operate dual-currency sweepstakes and social gaming platforms in the state and also expanded the definition of “gambling by computer.”
- HB 53 amended state law to upgrade various existing gambling crimes, including “gambling by computer”, to racketeering offenses that are punishable by up to 50 years’ imprisonment.
Though both of those bills were primarily targeted at illegal casinos, sportsbooks, or sweeps sites, Kalshi’s lawsuit suggests it is concerned about the ramifications for its own business. The company noted that AG Murrill’s office has the power to sue for temporary or permanent injunctions against alleged violators, and courts could shut down websites and freeze the assets of not only operators but associated companies like payment processors, geolocation providers, and media affiliates.
“Louisiana law makes it a crime to conduct, as a business, any ‘game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit,’ and separately criminalizes ‘gambling by computer,’ meaning the same conduct carried out over the internet,” stated Kalshi’s suit.
“… Defendants have made clear that they read those provisions to treat Kalshi’s federally regulated event contracts as unlicensed gambling by computer, despite the statute’s express provision that “[n]othing in this Section shall prohibit, limit, or otherwise restrict the purchase, sale, exchange, or other transaction related to stocks, bonds, futures, options, commodities, or other similar instruments or transactions occurring on a stock or commodities exchange, brokerage house, or similar entity’.”
Kalshi says it could not comply with Louisiana’s licensing requirements
Sports betting is exempted from that ban, as long as the operator is licensed by the LGCB. Louisiana law also explicitly includes exchange wagering in its definition of sports wagering, meaning that a company needs a state license to offer it.
Kalshi said Louisiana has in effect threatened to ban Kalshi from operating in the state, and called that stance “a form of regulation that intrudes on the federal scheme.” It also contended that even if the company was able to obtain a license from Louisiana, it could not operate within the state’s licensing regime as Louisiana’s state-specific requirements would be “impossible to reconcile with the [Commodity Exchange Act].”
“The Supremacy Clause does not tolerate that result,” Kalshi added. “Ceasing operations would place Kalshi in tension with, and could jeopardize its compliance with, the CFTC’s impartial access requirement, which requires a DCM to provide its members and other eligible participants with impartial access to its markets and services, among other things …
“By threatening enforcement, Louisiana has taken an extraordinary step in challenging the CFTC’s exclusive jurisdiction to regulate DCMs pursuant to the CEA. Louisiana apparently deems itself unencumbered by the Supremacy Clause and federal law such that it is free to impose its own regulatory regime on a 50-state federal derivatives exchange that is operating in conformance with federal law, as confirmed by its exclusive federal regulator.
“A preliminary injunction is necessary to restore the federal-state balance that the Constitution mandates.”
SBC Americas reached out to Gov. Landry’s office, AG Murrill’s office, and the LGCB for comment on the lawsuit, but did not hear back by the time of publishing.
