The Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice sued Louisiana in federal court in New Orleans on Nov. 13, asking a judge to declare the state’s gambling statutes preempted and prevent Attorney General Liz Murrill and state enforcement agencies from enforcing them.

The complaint, Case 2:26-cv-02612 in the Eastern District of Louisiana, was filed one day after a state judge in Tangipahoa Parish issued an order barring 32 firms from offering event contracts to anyone in Louisiana. The defendants include CFTC-registered exchanges, futures commission merchants and derivatives clearing organizations. According to the commission’s announcement, they received no notice or opportunity to be heard before the order was issued. Event contracts are derivative agreements whose payouts depend on the outcome of future events such as sports results, elections or award events, and the venues that list them operate under CFTC registration rather than state gaming licences.

Louisiana is the twelfth state the CFTC has sued over event contracts. What distinguishes the Louisiana case is the scope of the parish order: rather than targeting money or seeking penalties alone, it bars the listed firms from listing, accepting, clearing or settling the contracts.

What the Tangipahoa Order Prohibits

Murrill’s office filed the state petition on Nov. 12 as Louisiana v. Kalshi Inc. et al., No. 20060004268, 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 that evening.

The operative language, quoted in the federal complaint, prohibits 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.”

The licensing condition suggests that the state considers a lawful path available, but none of the 32 defendants holds a Louisiana gaming licence. In practice, the order operates as a prohibition rather than a compliance checklist. The reference to “all others considered sports wagering” also leaves the scope of the order to state regulators rather than to the contracts’ federal designation.

Federal Cases Were Already Pending in Louisiana

The state action followed two federal lawsuits brought by CFTC-registered exchanges against Murrill. QCX LLC filed in the Eastern District under No. 26-2482, while KalshiEX LLC filed in the Western District under No. 26-cv-4476.

On Nov. 12, the same day the state petition was filed in Tangipahoa, Kalshi moved for a temporary restraining order and preliminary injunction in its federal case. The parish petition was filed while that motion remained pending.

The following day, the CFTC and the Justice Department filed their own action in the Eastern District. The defendants include the state, Murrill, the Louisiana Gaming Control Board, its 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 the defendant list indicates that the federal case is not directed only at one prosecutor. It targets every Louisiana office identified in the complaint as having authority to investigate, cite, enjoin or freeze accounts connected to event-contract trading.

Criminal and Civil Penalties Behind the Order

The dispute involves criminal penalties, not only administrative enforcement. Louisiana enacted Act No. 182 during the 2026 regular session, effective Aug. 1. The law expanded the definition of “gambling by computer” in the state criminal code to cover internet and mobile games that use a dual-currency system — in practice, games in which players purchase one virtual currency for play and receive another that can be redeemed — and simulate gambling.

The CFTC’s complaint states that a person who engages in gambling by computer may face a fine of up to $100,000 and up to 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.

The cited statutes also provide civil enforcement tools. The attorney general may 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 activity.

Those measures create operational consequences for exchanges and their service providers. A clearing firm or payment partner covered by a freeze order would have to determine whether to continue servicing Louisiana customers while the federal litigation proceeds.

A Circuit Split on Federal Preemption

The CFTC’s central argument is jurisdictional. 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. The commission’s position treats event contracts as swaps.

In September, the Sixth Circuit held that Kalshi had not shown that its sports-event contracts met the statutory definition of a swap. The panel further held 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 ruling allowed the two states to regulate the exchange under their own gaming statutes. BlockchainReporter separately covered the holding and the two appeals behind it.

The Third Circuit has reached the opposite conclusion. The Louisiana 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 actions against registered exchanges. The practical effect of the split is geographic: after the Sixth Circuit’s ruling, Ohio and Tennessee could regulate the exchange under their gaming statutes, while state enforcement against registered exchanges has been enjoined by district courts in Illinois and Minnesota.

Louisiana is within the Fifth Circuit, which has not yet ruled on the question. The Tangipahoa order gives the circuit a potential opportunity to address the issue sooner than it otherwise might have.

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 barring the state from investigating or enforcing those laws.

The requested relief specifically asks the court to prevent Louisiana from enforcing or extending the Tangipahoa restraining order. The complaint also seeks costs but does not request damages.

The CFTC has been pursuing a regulatory argument in parallel. On Oct. 19, it opened a comment period on proposed rules concerning event contracts, published at 91 Fed. Reg. 65,969 and 91 Fed. Reg. 66,022. Those measures remain proposals rather than final rules and do not resolve the legal questions before the courts.

The parish order likewise does not resolve them. An ex parte restraining order is an interim measure issued on the basis of one side’s filings. It is not a finding that Louisiana’s gambling statutes apply to federally designated contracts. The Sixth Circuit’s ruling leaves open the possibility that the Fifth Circuit could reach either side of the preemption dispute.

Twelve States, Seventeen Forums and 103 Days

The Louisiana lawsuit is part of a broader CFTC campaign. The commission has sued twelve states over event contracts. Its Utah filing on Oct. 27 followed the same general pattern: a complaint seeking injunctive and declaratory relief and an effort to preserve the status quo.

The commission has also filed amicus briefs in four federal Courts of Appeal and one state Supreme Court. In total, it is litigating the same question in seventeen federal and state forums.

The Louisiana proceeding illustrates how state-court action can differ from federal litigation. A single petition in one parish court reached 32 entities in one evening, including brokers and clearing houses that are not parties to any of the twelve federal lawsuits. The federal cases, by contrast, can take months to produce a ruling.

Act No. 182 took effect on Aug. 1, and the Tangipahoa restraining order was issued on Nov. 12. The state therefore took 103 days to turn the statute into an operating restriction. The CFTC’s litigation campaign has been underway longer but has not yet produced a final appellate ruling.

The financial exposure also runs in opposite directions. The commission’s complaint seeks no money, while the challenged statute authorizes fines of up to $100,000 per person for the underlying conduct, along with possible imprisonment.

The next proceedings include a hearing in the 21st Judicial District Court on whether the restraining order should become a preliminary injunction. That hearing would place the licensing condition before a state judge on a more developed record. A federal ruling in the Eastern District could also be subject to expedited review by the Fifth Circuit.

The other 31 defendants must also decide whether to continue serving Louisiana users while the federal court considers the dispute. Those decisions, together with the pending hearings and any federal ruling, will shape whether Louisiana residents retain access to event-contract trading while the jurisdictional question is decided.

CFTC Chairman Michael S. Selig described the filing in terms of regulatory authority rather than market harm. “Event contracts have traded openly in Louisiana for years, in compliance with the Commodity Exchange Act and CFTC regulations,” he said in the commission’s announcement.

Selig called Louisiana’s action an “eleventh-hour ’emergency’ lawsuit seeking to shut down the entire prediction market industry,” describing it as “naked lawfare and a cynical political stunt.” He summarized the commission’s request by saying, “The Commission’s lawsuit seeks to maintain the status quo while the federal courts decide this issue in an orderly manner.”

The full complaint sets out the defendants and requested relief. The Arkansas suit filed the same day provides another indication of how quickly the CFTC’s litigation sequence is advancing.

Source: https://cryptonews.net/news/legal/33750573/