Kalshi sues Louisiana pre-emptively over prediction market crackdown
The trading platform asked a federal court to block Louisiana from enforcing new gambling laws against its sports event contracts, extending the prediction markets dispute into Fifth Circuit territory.
Kalshi filed suit against the state of Louisiana on Friday 23 October, seeking court protection before regulators take enforcement action against its sports event contracts.
The complaint, lodged in the U.S. District Court for the Western District of Louisiana, names Attorney General Liz Murrill, Governor Jeff Landry, Louisiana Gaming Control Board (LGCB) chair Christopher Hebert, LGCB gaming division director Dawn Himel, and the Louisiana State Police Gaming Enforcement Division as defendants, according to SBC Americas.
Kalshi is asking the court for a temporary restraining order plus preliminary and permanent injunctions to stop the state pursuing enforcement against its contracts.
The company argues Louisiana has shown a "clear intention to violate the Supremacy Clause" by moving to treat its federally regulated contracts as unlicensed gambling.
As evidence, the filing cites a December 2025 letter Hebert sent to the state's licensed sportsbooks, warning that offering prediction markets on sporting events breaches Louisiana law and could jeopardise their gaming licences.
"It is the board's position that such activities constitute sports wagering under Louisiana law," Hebert wrote, adding that any event-style "contract," "swap," "market" or similar instrument allowing a stake on a sporting outcome outside a board-licensed operator "constitutes illegal gambling."
Louisiana statute also specifically classes exchange wagering as a form of sports wagering, reinforcing the state's position that a licence is required to offer it, SBC Americas reported.
The suit marks the first time the long-running prediction markets litigation has reached the Fifth Circuit's jurisdiction, with parallel cases already under way in the Third, Sixth and Ninth Circuits.
Kalshi's filing places particular weight on two Louisiana laws that took effect on 1 August 2026, House Bill 53 and House Bill 883, both signed by Landry in May.
HB 883 criminalised the operation of dual-currency sweepstakes and social gaming platforms in the state and broadened the definition of "gambling by computer."
HB 53 went further, upgrading a range of existing gambling offences, including gambling by computer, to racketeering charges carrying penalties of up to 50 years' imprisonment.
Although both bills were aimed primarily at unlicensed casinos, sportsbooks and sweepstakes operators, Kalshi's lawsuit signals concern that the broadened language could expose its own operation to prosecution.
The company noted that Murrill's office can seek temporary or permanent injunctions against alleged violators, and that courts could order websites shut down and freeze the assets of operators and affiliated businesses, including payment processors, geolocation providers and media partners.
Kalshi's complaint quotes the statute's carve-out for transactions on stock or commodities exchanges, arguing state officials have ignored that exemption in treating its contracts as illegal gambling by computer.
The company further contends that even if it sought a Louisiana licence, the state's requirements would be impossible to reconcile with its obligations under federal commodities law, according to the filing cited by SBC Americas.
The dispute adds Louisiana to a growing list of states where Kalshi has turned to federal court to pre-empt or challenge enforcement against its sports-related event contracts, as regulators and prediction markets operators continue to clash over whether such products fall under state gambling law or federal commodities oversight.