Kalshi Preemptively Sues Louisiana Officials to Block Enforcement of New Digital Gambling Crimes

Kalshi filed suit on October 23 in the U.S. District Court for the Western District of Louisiana against state officials it says intend to treat its sports event contracts as unlicensed gambling. The complaint names Attorney General Liz Murrill, Gov. Jeff Landry, Louisiana Gaming Control Board Chair Christopher Hebert, LGCB Gaming Division Director Dawn Himel, and the Louisiana State Police Gaming Enforcement Division. Kalshi seeks a temporary restraining order plus preliminary and permanent injunctions, arguing the state's position violates the Supremacy Clause and intrudes on exclusive CFTC jurisdiction under the Commodity Exchange Act.

The action represents the first extension of prediction-market litigation into Fifth Circuit territory. Parallel cases continue in the Third, Sixth, and Ninth Circuits. Kalshi's filing cites enforcement signals dating to late 2025, including a letter Hebert sent to LGCB-licensed sportsbooks warning that event contracts on sporting outcomes constitute illegal gambling and could jeopardize licenses.

Louisiana's 2026 Gambling-by-Computer Statutes

Two bills signed by Landry in May took effect August 1. House Bill 53 upgraded gambling by computer to a racketeering offense punishable by up to 50 years imprisonment. House Bill 883 expanded the definition of the offense and targeted unauthorized digital gambling platforms. Although aimed primarily at illegal casinos, sweeps, and sportsbooks, Murrill's office holds authority to seek injunctions that could freeze assets of operators, payment processors, and affiliates.

The complaint quotes Louisiana law defining gambling as any contest in which a person risks value for profit, then notes the statute separately criminalizes the same conduct when conducted over the internet. Kalshi states that defendants read those provisions to cover its federally regulated contracts despite an express carve-out for stocks, bonds, futures, options, commodities, and similar instruments.

Federal Preemption and Licensing Impossibility

Kalshi argues that even attempting to obtain an LGCB sports-wagering license would prove impossible to reconcile with CFTC impartial-access rules that require nationwide access for eligible participants. "The Supremacy Clause does not tolerate that result," the suit states. "Ceasing operations would place Kalshi in tension with, and could jeopardize its compliance with, the CFTC’s impartial access requirement."

The company contends Louisiana has challenged the CFTC’s exclusive jurisdiction over designated contract markets. A preliminary injunction, it says, is necessary to restore the federal-state balance the Constitution mandates. As reported by SBC Americas, Landry's office, Murrill's office, and the LGCB did not respond to requests for comment by publication.

Where the Risk Lies

Without injunctive relief, Kalshi faces the immediate prospect of state racketeering prosecutions carrying decades-long sentences and asset freezes that could disrupt its CFTC-compliant national exchange. The counterargument from Louisiana is straightforward: sports betting and exchange wagering fall under state licensing authority, and federal law does not preempt core police powers over unlicensed gambling. The tension will force the district court to decide whether Louisiana's criminal statutes can reach CFTC-approved event contracts on sports outcomes or whether federal derivatives oversight occupies the field.