CFTC Lawsuit Against Louisiana Seeks to Uphold Federal Authority Over Event Contracts

The Commodity Futures Trading Commission has filed a lawsuit against Louisiana to block the state from prohibiting the offering of event contracts by CFTC-regulated designated contract markets, futures commission merchants, and derivatives clearing organizations.

Louisiana obtained a state court order shutting down the operation of more than 30 companies in the state connected to the trading of CFTC-regulated derivatives products. The order issued without giving the defendants notice or an opportunity to be heard.

“Event contracts have traded openly in Louisiana for years, in compliance with the Commodity Exchange Act and CFTC regulations,” said Chairman Michael S. Selig. “The state’s eleventh-hour ‘emergency’ lawsuit seeking to shut down the entire prediction market industry is naked lawfare and a cynical political stunt. The Commission’s lawsuit seeks to maintain the status quo while the federal courts decide this issue in an orderly manner.”

Pattern of Federal Pushback

Louisiana becomes the 12th state the CFTC has sued to defend its exclusive jurisdiction over derivatives markets as granted by Congress under the Commodity Exchange Act. The CFTC has also submitted amicus briefs in four federal Courts of Appeal and one state Supreme Court.

The regulator's filing directly challenges the state court order and asserts federal primacy in this space.

The Push for Orderly Resolution

The CFTC's suit prioritizes maintaining existing operations pending federal court review rather than allowing abrupt state intervention. This approach limits disruption for compliant market participants and channels the dispute into established federal processes for resolving jurisdictional conflicts.