A Louisiana judge issued a temporary restraining order Thursday barring Kalshi, Polymarket, Robinhood, Coinbase and other prediction market operators from offering event contracts in the state without a Louisiana gaming license and permit.
The companies must block access to the prohibited offerings from within Louisiana. Contracts on elections and awards are covered along with sports wagers.
Judge Jeffrey Johnson signed the order Nov. 12 in the 21st Judicial District Court in Tangipahoa Parish, hours after Attorney General Liz Murrill sued the operators.
The ruling gives Louisiana immediate relief while its case proceeds. Johnson issued it without advance notice to the defendants and scheduled a Nov. 30 hearing on the state’s request for a preliminary injunction.
“It’s not complicated: if you aren’t a licensed gaming operator, you aren’t legal,” Murrill wrote on X after releasing the order.
The companies say their event contracts come under federal regulation. Louisiana argues that the offerings are gambling and that the operators need state approval.
Restrictions Reach Beyond Sports
Johnson’s order bars the defendants from offering, brokering, clearing, settling or otherwise facilitating event contracts for people in Louisiana without the required license and permit.
They cannot take wagers from anyone in the state or give them market access. To enforce that restriction, the order requires geofencing, which blocks access based on a customer’s location.
The companies also cannot advertise their offerings to people in Louisiana as lawful, licensed or authorized in the state.
Among the defendants are companies associated with ForecastEx, Crypto.com, Novig, Underdog, Gemini and ProphetX. Rothera Exchange and Clearing and IG Group Holdings are named as well.
Company principals, officers, employees, agents and counsel must comply once they know about the order. The same requirement applies to others acting in concert with the defendants.
Johnson found that the petition showed violations of Louisiana’s gambling-by-computer law. He also found immediate and irreparable harm to the state and its citizens, grounds he accepted for issuing the order without advance notice.
Louisiana did not have to post a bond. The order says the state brought the action to defend its sovereign interests and those of its citizens.
The opening page of the state’s petition cites Kalshi contracts on Senate control, the next White House press secretary, the best picture Oscar and the federal funds rate.
Murrill accused the operators of using new terminology to evade gambling laws, regulators and taxes. The temporary order does not settle the case through a final judgment.
Companies Challenge State Authority
Kalshi asked a federal court Thursday to restrain Louisiana enforcement, according to The Block. Its filing said the company expected the state to take action against it.
Robinhood told the outlet that its contracts are federally regulated and offered through Robinhood Derivatives, a CFTC-registered entity. Coinbase said Louisiana’s lawsuit added to a patchwork of state enforcement that Congress sought to prevent.
The Coalition for Prediction Markets, which represents several defendants, also challenged the lawsuit, arguing that Louisiana was trying to regulate markets governed by federal law.
The Commodity Futures Trading Commission has sued states over that same dispute. On April 2, the CFTC announced lawsuits challenging actions by Arizona, Connecticut and Illinois against federally registered designated contract markets. It argues that federal law gives the agency exclusive regulatory authority over event contracts traded on those markets.
The Block also cited reports of separate CFTC investigations involving the platforms. CNBC reported an inquiry into whether Kalshi properly notified the regulator about proposed contracts. Reuters reported an investigation involving U.S. access to Polymarket’s overseas platform. Those reports do not establish wrongdoing.
In January 2022, the CFTC ordered Blockratize, doing business as Polymarket, to pay a $1.4 million civil penalty and wind down noncompliant markets. It also required the company to stop offering trading access unless the activity complied with federal law.
The Louisiana order expires at the same hour on the tenth day after issuance unless extended. For good cause, the court may grant extensions of no more than 10 days each before the order expires. The defendants may consent to a longer period.
The hearing on Louisiana’s request for a preliminary injunction is set for Nov. 30 at 9 a.m.