Kalshi Lawsuit Challenges Louisiana Gambling Laws

Kalshi goes on the offensive against Louisiana

The filing of Kalshi's federal lawsuit took place in the Western District of Louisiana. Lawyers for the prediction market site are seeking a temporary restraining order, a preliminary injunction, and a permanent injunction. These rulings would be designed to prevent Louisiana from enforcing its state gambling laws to halt Kalshi's sports-event contracts.

"Kalshi believes [that Louisiana] will imminently bring an enforcement action with the intent to bar Kalshi from offering event contracts,” the lawsuit reads. "Defendants have repeatedly made clear that they believe event contracts like Kalshi's are illegal under Louisiana gambling laws, even when listed on a CFTC-regulated exchange."

Kalshi's lawyers also note that Louisiana AG "Murrill has signed multiple amicus briefs in federal courts of appeals arguing that Kalshi’s contracts violate state gambling laws."

They further argue that "federal preemption under the Supremacy Clause shields its CFTC-regulated operations from state gambling restrictions."

Louisiana officials counter that sports-event contracts are illegal gambling

In the Bayou State, the belief that sports-event contracts offered by prediction market sites like Kalshi are illegal sports betting is long held. Nearly a year ago, in December 2025, the Louisiana Gaming Control Board (LGCB), the state regulator over all gambling, issued an advisory notice. That notice stated a declaration from the LGCB that it "considers purported sporting event contracts and certain other event contracts as illegal gambling in violation of the Louisiana Criminal Code and Louisiana Gaming Control Law."

Louisiana gambling definitions declare all exchange wagering to be a sports wager. This position also includes federally regulated exchanges like Kalshi's prediction markets. It covers contracts "based on the outcome of partial outcome of any sporting or athletic event, or other selected events."

Not surprisingly, Murrill shares this opinion of prediction market event contracts.

"I'm very concerned about them," Murrill said. "They literally will let people bet on anything you can think of. That's gambling.

"We've made it very clear that if you're doing something that we think is illegal, then it could jeopardize your legal license."

New state law could trip up Kalshi

In August, Louisiana enacted a new state gambling law that appears to be taking direct aim at prediction market sites. Kalshi's lawyers acknowledge that concern about this new law is playing a role in the filing of this lawsuit.

Louisiana's Gambling By Computer law took effect on August 1. As part of the law, it leaves companies that process payments for and provide other services to prediction market sites open to both civil and criminal punishment. Unlicensed operators like Kalshi could face severe penalties. Potential actions include website shutdowns, frozen bank accounts, and prison sentences of up to five years.

The new law increases the penalty for offering gambling games by computer. It previously was up to a $20,000 fine and up to five years' imprisonment with or without hard labor. Now it is up to a $100,000 fine and up to five years' imprisonment with or without hard labor.