Louisiana Cracks Down on Markets

Louisiana gaming regulators have entered the fast-expanding fight over prediction markets, issuing a formal advisory that classifies sports-related event contracts as sports betting under state law. The move adds new pressure on platforms like Kalshi and Polymarket, which are already navigating a growing wave of state enforcement actions, tribal objections and more than 20 active lawsuits nationwide.

In a letter circulated to licensees last week, Louisiana Gaming Control Board (LGCB) chair Christopher Hebert warned operators that any effort to “operate, offer or otherwise facilitate” prediction markets may constitute illegal sports wagering in the state. The advisory, obtained by iGB, leaves little ambiguity about how the state views such markets.

“It is the Board’s position that such activities constitute sports wagering under Louisiana law and are not being conducted in compliance” with state regulations, the letter states. It cautions that both direct and indirect involvement could jeopardize a company’s suitability for future licensure.

 

• Louisiana’s Gaming Control Board has officially declared prediction markets to be illegal sports wagering, warning that even indirect involvement could jeopardize operator licenses.

• The advisory rejects arguments that prediction markets fall under CFTC jurisdiction, asserting they are gambling products prohibited under state law.

• Louisiana’s move aligns with a growing national wave of lawsuits and state actions targeting platforms like Kalshi and Polymarket as prediction markets gain mainstream traction.

 

Expanding State Pushback

Louisiana’s stance aligns it with a growing bloc of states—among them New York, Maryland, Nevada and Ohio—seeking to fold prediction markets into traditional gambling frameworks. Regulators have issued a flurry of cease-and-desist notices in recent months, especially as major sports betting companies prepare to launch their own event-based prediction products.

Fanatics Markets debuted its platform last week, while DraftKings and FanDuel are nearing their own rollouts. Daily fantasy operators PrizePicks and Underdog have also moved into the prediction-market space, triggering heightened scrutiny across jurisdictions.

Louisiana’s signal comes amid broader efforts to assert the state’s gambling authority. Earlier this year, Governor Jeff Landry vetoed a bill targeting sweepstakes casinos, saying it was unnecessary—a move that strengthened the LGCB’s mandate. Shortly afterward, regulators issued 40 cease-and-desist letters to what they identified as illegal operators. A central dispute in the nationwide controversy is whether prediction markets fall under the oversight of the Commodity Futures Trading Commission (CFTC), which Kalshi argues regulates its contracts as commodities. Louisiana dismisses that view outright.

According to the advisory, the LGCB “does not view sports event contracts as commodities transactions” and argues that both state law and federal commodities rules bar markets tied to illegal gambling activities. Because the board considers these contracts “both gaming and illegal,” the letter states, a CFTC license would not offer a viable defense.

The LGCB also reiterates that only approved sports wagering operators may offer bets—and only on events included in the state’s official sports wagering catalog. Any event-style “contract,” “swap,” “market” or “financial instrument” allowing individuals to stake value on a sporting outcome outside that framework, it says, is illegal gambling.

 

Lawsuits Mount as Industry Grows

The regulatory push comes as prediction markets accelerate their mainstream expansion. Kalshi recently closed a $1 billion funding round, raising its valuation to $11 billion, while Polymarket continues to attract heavy volumes in political, financial and pop-culture markets.

Yet the sector’s rapid growth has triggered a surge of legal battles. More than 20 lawsuits involving prediction markets are now active across the U.S., many centered on whether Kalshi’s platform violates state gambling laws. Some tribal authorities argue that prediction markets infringe on the Indian Gaming Regulatory Act by operating gambling products outside tribal compacts.

Connecticut became the latest state to face a prediction-market lawsuit last week, joining Maryland, Nevada, New Jersey, New York, Ohio and others. In Massachusetts, a court hearing is scheduled this week in a case brought by Attorney General Andrea Campbell. In Nevada—one of the earliest states to pursue action against Kalshi—a judge last month reversed an earlier ruling that had granted the company temporary protection from regulatory enforcement.

 

It is the Board’s position that such activities constitute sports wagering under Louisiana law and are not being conducted in compliance with Louisiana Gaming Control law or under a valid Louisiana-issued license or permit.

 

A National Test Case

With Louisiana’s advisory, the national conflict over prediction markets is intensifying on multiple fronts: state gambling laws, federal commodities regulation, tribal jurisdiction and the growing involvement of major sportsbook operators.

For now, the LGCB’s warning is clear. Companies involved in prediction markets—whether established financial platforms or emerging sportsbook products—could face consequences for operating in Louisiana without a sports wagering license. And regulators signaled that violations in other states may also factor into a company’s suitability for licensure.

As prediction markets gain traction and investment, their legal status remains unsettled. What happens next in Louisiana—and in the courts from Massachusetts to Nevada—will shape how, and where, these markets operate in the years ahead.