Nov. 15 (CandyPulse) — Is betting on an election result a financial product or gambling? That question is now in federal court. The CFTC, the U.S. derivatives regulator, has sued the state of Louisiana after a state court ordered prediction-market companies to shut out its residents.
Key takeaways
| Item | Detail |
|---|---|
| Who is suing | The Commodity Futures Trading Commission (CFTC) |
| Who is being sued | The state of Louisiana |
| Why | To void a state court order blocking prediction markets |
| Companies named in the state order | Kalshi, Polymarket, Coinbase, Robinhood and affiliates |
| What the order requires | Stop offering event contracts to Louisiana residents without a state licence, and geofence the state |
| States the CFTC has now sued | Twelve |
An event contract pays out depending on whether something happens: who wins an election, whether a team wins, whether interest rates rise. Prediction markets let people buy and sell these, and the prices act as live forecasts. We've cited them ourselves, and this week we covered Meta testing a points-based version.
Louisiana's view: it's gambling. The state's gaming regulator issued an advisory in December 2025 classing sports-related and certain other event contracts as illegal gambling under state law. Attorney General Liz Murrill sued the companies, and a state judge ordered them to block Louisiana users unless they hold a state licence.
The CFTC's view: it's a federally regulated financial product. The agency argues that event contracts fall under its exclusive authority, so states can't ban them. It also says the companies got no notice or chance to be heard before the order was issued.
The exchange has turned sharp. Murrill called CFTC Chairman Michael Selig an "obsequious standard bearer" for the industry. An industry group, the Coalition for Prediction Markets, called Louisiana's lawsuit "troubling and unlawful".
Louisiana is the twelfth state the CFTC has taken to court on this point, and the eleventh state to sue one or more prediction markets. It's a nationwide tug-of-war over who makes the rules.
The stakes are high for a fast-growing industry. If states win, companies face a patchwork of 50 different rulebooks and may be blocked in many places. If the CFTC wins, one federal regulator sets the terms. Selig has said he wants the Supreme Court to settle whether event contracts are swaps or gambling.
Follow the wider picture on our regulation page.
If you use prediction markets, check what's permitted where you live, and never use a VPN to get around a geographic block; that can breach both the platform's terms and local law. Only stake what you can afford to lose. Our crypto glossary explains terms like "event contract" and "swap".
Watch for the federal court's response to the CFTC's request, whether more states take action, and any move toward a Supreme Court hearing.
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Track the market on our Bitcoin price today and crypto prices today pages, follow the Crypto News Today desk, and catch up every Sunday with CANDY Weekly.
Disclaimer: This article is for information only and is not financial or legal advice. The legal status of prediction markets varies by location and is being decided in court. Always check the rules that apply to you.
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