CFTC Sues Louisiana Over Prediction Market Ban

The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against the State of Louisiana. The Commission argues that the state is wrongly applying its gambling laws to event contracts that are subject to federal regulation.

On Thursday, November 12, a Louisiana judge granted a request from Attorney General Liz Murrill and issued a temporary order requiring prediction markets to immediately stop operating within the state. CFTC lawyers then asked the U.S. District Court for the Eastern District of Louisiana to prevent the consequences of the state's order and to issue a legal declaration.

CFTC Chairman Michael Selig said that event contracts have been openly traded in Louisiana for years, in line with the Commodities Exchange Act and CFTC regulations. Selig said the state, through an emergency lawsuit filed at the last minute, was trying to shut down the entire prediction market industry, and that the case was nothing more than legal pressure combined with a political show. The Commission said the lawsuit defends its exclusive authority over derivatives markets against the states. Louisiana became the 12th state the CFTC has sued.

According to the CFTC, licensed prediction markets are not required to comply with state gambling laws or court orders. The Commission bases this position on the Supremacy Clause of the Constitution. Murrill, however, argues that prediction markets allow people in Louisiana to bet on almost anything, and believes they are violating the law by offering unlicensed online gambling and sports betting products. Murrill also said that Selig's statement on X, claiming the contracts had been traded in compliance with the law for years, was not accurate.

The lawsuit was filed on Friday, November 13, and no judge has yet been assigned to the case. Selig said the Commission's goal is to preserve the current situation while the federal courts decide the matter in an orderly way.