- 1. What the Tangipahoa Order Actually Prohibits
- 2. Three Federal Cases Were Already Running in Louisiana
- 3. The Penalties Sitting Behind the Order
- 4. The Circuit Split the Fifth Circuit Will Have to Choose From
- 5. What the Filing Asks For, and What It Does Not Decide
- 6. Twelve States, Seventeen Forums, One Hundred and Three Days
The Commodity Futures Trading Commission and the U.S. Department of Justice sued Louisiana in federal court in New Orleans on Nov. 13. The complaint, Case 2:26-cv-02612 in the Eastern District of Louisiana, asks a judge to declare the state’s gambling statutes preempted and to stop Attorney General Liz Murrill and state enforcement agencies from acting on them.
It landed one day after a state judge in Tangipahoa Parish signed an order barring 32 firms from offering event contracts to anyone in the state. Those defendants include CFTC-registered exchanges, futures commission merchants and derivatives clearing organizations. They were given no notice or chance to be heard before the order issued, according to the commission’s announcement of the filing.
Louisiana is the twelfth state the CFTC has sued over event contracts. The number is not what makes this filing different. The parish order stopped conduct rather than money: it bars the listed firms from listing, accepting, clearing or settling the contracts at all.
What the Tangipahoa Order Actually Prohibits
Murrill’s office filed the petition on Nov. 12 as Louisiana v. Kalshi Inc. et al., No. 20060004268, in the 21st Judicial District Court for Tangipahoa Parish. It 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, bars 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 covers contracts “related to sports, elections, award events, and all others considered sports wagering under La. R.S. 27.” Two details in that sentence carry more weight than the rest.
First, the licensing condition implies a lawful path exists, but none of the 32 defendants holds a Louisiana gaming licence. In practice the order is a stop, not a compliance checklist. Second, the phrase “all others considered sports wagering” hands the scope question to state regulators rather than to the contract’s federal designation.
Three Federal Cases Were Already Running in Louisiana
The state did not act in a vacuum. Two CFTC-registered exchanges had already sued Murrill in federal court in Louisiana: QCX LLC in the Eastern District, as No. 26-2482, and KalshiEX LLC in the Western District, as No. 26-cv-4476.
On Nov. 12, the same day the state filed in Tangipahoa, Kalshi moved for a temporary restraining order and preliminary injunction in its federal case. The Tangipahoa petition arrived while that motion was pending.
By the next day the commission and the Justice Department had filed their own action in the Eastern District. It names 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.
That defendant list is the tell. The federal suit is not aimed at one prosecutor. It is aimed at every Louisiana office with authority to investigate, cite, enjoin or freeze accounts connected to event-contract trading.
The Penalties Sitting Behind the Order
The stakes are criminal, not administrative. Louisiana enacted Act No. 182 of the 2026 regular session, effective Aug. 1, which expanded the definition of “gambling by computer” in the state criminal code. It now covers internet and mobile games that use a dual-currency system and simulate gambling.
The commission’s complaint states that a person who engages in gambling by computer faces a fine of up to $100,000 and up to five years imprisonment. Anyone who “knowingly supports or facilitates” the operation faces up to $20,000 and the same potential prison term.
Civil tools run alongside. Under the statutes the complaint cites, the attorney general can send cease-and-desist notices, open investigations, seek injunctions, restrict access to websites and ask courts to freeze bank or credit accounts tied to the activity.
For an exchange, that is an operational risk before it is a legal one. A clearing firm or payment partner caught inside a freeze order has to decide within hours whether to keep servicing Louisiana customers.
The Circuit Split the Fifth Circuit Will Have to Choose From
The commission’s core argument is jurisdictional, not factual. It relies on 7 U.S.C. § 2(a)(1)(A), which gives the CFTC exclusive jurisdiction over futures, options and swaps traded on registered exchanges, and it treats event contracts as swaps.
In September, the Sixth Circuit held that Kalshi had not shown its sports-event contracts meet the statutory definition of a swap. The panel added that even if they did, the Commodity Exchange Act neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws.
That ruling cleared the way for two states to regulate the exchange under their own gaming statutes. BlockchainReporter covered the holding and the two appeals behind it.
The Third Circuit has gone the other way. The complaint cites KalshiEX, LLC v. Flaherty, 172 F.4th 220 (3d Cir. 2026), alongside district court injunctions in Illinois and Minnesota, as evidence that federal courts have repeatedly blocked state enforcement against registered exchanges.
Louisiana sits in the Fifth Circuit, which has not ruled on the question. The parish order gives that court a reason to take it up sooner than it otherwise would have.
What the Filing Asks For, and What It Does Not Decide
The relief requested is narrow in an instructive way. The complaint asks for a declaratory judgment that Louisiana’s laws are preempted and invalid as applied to transactions on CFTC-regulated exchanges. It also seeks a preliminary and permanent injunction barring the state from investigating or enforcing those laws.
The prayer goes further than a general bar. It asks for an order specifically blocking the state from enforcing or extending the Tangipahoa restraining order, plus costs. It asks for no damages.
That is a choice, not an oversight. A preemption ruling turns on who regulates the contracts, and it can arrive before a state case reaches judgment. A fight about whether a sports contract serves a hedging purpose would take far longer.
The commission has been building the regulatory side of its argument in parallel. It opened comment on Oct. 19 on proposed rules touching event contracts, at 91 Fed. Reg. 65,969 and 91 Fed. Reg. 66,022. Those are proposals. They are not final rules, and they settle nothing a court has to decide.
Nor does the parish order settle it. An ex parte restraining order is a holding measure issued on one side’s papers. It is not a finding that Louisiana’s gambling statutes apply to federally designated contracts, and the Sixth Circuit’s contrary holding means the Fifth Circuit could land on either side of the split.
Twelve States, Seventeen Forums, One Hundred and Three Days
The arithmetic of the campaign is worth stating plainly. The commission has sued twelve states, and its Utah filing of Oct. 27 shows how routine the sequence has become: another state, another complaint for injunctive and declaratory relief, another request to preserve the status quo.
Alongside those suits it has filed amicus briefs in four federal Courts of Appeal and one state Supreme Court. That is seventeen separate federal and state forums in which the agency is now litigating the same question.
Louisiana shows what the state route can do that the federal one cannot. One petition in one parish court reached 32 entities in a single evening, including brokers and clearing houses that are not parties to any of the twelve federal suits. The federal suits, by contrast, take months to produce a ruling.
Measured from Act No. 182 taking effect on Aug. 1 to the restraining order on Nov. 12, the state needed 103 days to convert a statute into an operating restriction. The commission has been at this far longer and still has no final appellate answer.
The cost asymmetry runs the same direction. The commission’s complaint asks for no money at all. The statute it is challenging authorises fines of up to $100,000 per person for the underlying conduct, with prison time attached.
The next observable signals are specific. A hearing in the 21st Judicial District Court on whether the restraining order becomes a preliminary injunction, which would put the licensing condition in front of a state judge on a fuller record. A federal ruling in the Eastern District, which the Fifth Circuit could review on an expedited basis.
And the behaviour of the other thirty-one defendants, several of which must now decide whether to keep serving Louisiana users while a federal court weighs the question.
The commission’s chairman, Michael S. Selig, framed the filing in the language of institutional order 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 announcement.
He called the state’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.” And he set out the request in one line: “The Commission’s lawsuit seeks to maintain the status quo while the federal courts decide this issue in an orderly manner.”
Whether that status quo survives the next hearing is now the operative question for anyone trading event contracts from Louisiana, and for the brokers and clearing firms that route those orders. The full complaint for injunctive and declaratory relief sets out the defendant list and requested relief in full; the Arkansas suit filed the same day shows how quickly the sequence is now moving.
About the author
Entrepreneur and freelance writer based in Nakuru, Kenya. I cover cryptocurrency, the Blockchain technology, and financial topics. It’s my joy to transform the simplest phrases in a way they reach a reader’s heart to help them discover how crypto is disrupting the world as we have known it. I believe in transforming the world, one word at a time.
