Prediction market operator Kalshi has filed a lawsuit in the US District Court for the Western District of Louisiana, seeking to prevent state officials from enforcing laws that would block its federally regulated sports event contracts. The suit, filed on Friday, names Louisiana Attorney General Liz Murrill, Governor Jeff Landry, Louisiana Gaming Control Board (LGCB) Chair Christopher Hebert, LGCB Gaming Division Director Dawn Himel, and the Louisiana State Police Gaming Enforcement Division as defendants.
Legal Challenge Over State Enforcement
Kalshi is requesting a temporary restraining order, as well as preliminary and permanent injunctions, to halt any enforcement action targeting its operations in Louisiana. The company argues that Louisiana officials have demonstrated an intent to take enforcement action against prediction markets, citing public statements and legal filings dating back to late last year. Kalshi claims these actions violate the Supremacy Clause by interfering with federal regulation of its contracts, which are overseen by the Commodity Futures Trading Commission (CFTC).
Background: State Laws and Regulatory Tensions
The lawsuit highlights a December 2025 letter from LGCB Chair Hebert warning licensed sportsbooks that offering prediction markets on sports could violate state law and affect their licenses. Hebert clarified that Louisiana considers such activities to be sports wagering, including exchange wagering. The complaint also references two laws—House Bills 53 and 883—signed in May and effective from August 1, 2026. These laws expand the definition of "gambling by computer," criminalize certain sweepstakes and social gaming, and upgrade some gambling offenses to racketeering crimes punishable by lengthy prison terms. While these laws primarily target illegal gambling operations, Kalshi argues they could be used against its federally regulated platform.
Implications for the Industry
For operators, affiliates, and suppliers, the case underscores the ongoing uncertainty surrounding the intersection of state and federal regulation in the US. Kalshi's suit contends that Louisiana's stance could force federally regulated platforms out of the state, impacting not only operators but also payment processors, geolocation providers, and media affiliates. The outcome could set a precedent for how prediction markets are treated under state law, especially as other states like Utah and Illinois have recently taken differing approaches to similar issues. The case marks the first time prediction market litigation has entered the Fifth Circuit's jurisdiction, potentially influencing future regulatory and enforcement strategies.
Key takeaways
- Kalshi is suing Louisiana officials to block enforcement against its sports event contracts.
- The company claims state actions violate federal supremacy, as its contracts are CFTC-regulated.
- Recent Louisiana laws expand the definition of illegal online gambling and raise penalties.
- The outcome could affect operators, affiliates, and suppliers in Louisiana and beyond.
Update (28.10.2026)
Kalshi has also initiated legal action against Missouri Attorney General Catherine Hanaway and the Missouri Gaming Commission, seeking to prevent enforcement of Missouri's gambling laws on its sports-event contracts. After receiving a cease-and-desist letter on September 16, Kalshi was given until October 30 to comply, though Missouri declined to guarantee non-enforcement. Kalshi references the CFTC's recent proposed rule that includes sports-event contracts as swaps and argues that blocking Missouri residents would violate federal impartial access requirements. Kalshi is seeking both declaratory and injunctive relief, with plans to request a preliminary injunction. Meanwhile, Nadex, operator of OG.com, has sued Utah following Utah's lawsuit against Kalshi, citing imminent enforcement threats. In the broader market, Robinhood reported Q3 event contract revenue of $173 million, surpassing crypto trading for the second consecutive quarter, while Caesars Entertainment posted a 2.5% revenue rise but a widened net loss. U.S. iGaming revenue growth slowed to 12% year-over-year in Q3, and Fanatics achieved its highest-ever quarterly sports betting market share. Kalshi has introduced deposit limits for traders under 21, and former NBA player Malik Beasley has agreed to plead guilty in a sports betting case.