Louisiana advisory targets sports prediction markets

The move adds fresh pressure as prediction markets like Kalshi and Polymarket expand and face a growing wave of state lawsuits and tribal challenges.

Louisiana gaming regulators are the latest state jurisdiction to weigh in on prediction markets, declaring in a new advisory that sports event contracts are sports betting under state law.

Louisiana Gaming Control Board chair Christopher Hebert sent the letter last week, addressing licensees that “may be exploring opportunities to operate, offer or otherwise facilitate access to prediction markets, platforms or event-based contracts”.

“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 licence or permit,” the letter obtained by iGB reads.

“The board issues this advisory to make it clear that any direct or indirect involvement in the operation, offering, or facilitation of sporting event contracts may affect a regulated party’s suitability for licensure or permitting in Louisiana.”

By treating sports event contracts as illegal sports betting and warning that even indirect involvement could threaten licences, Louisiana is joining a growing bloc of states trying to box prediction markets into traditional gambling law.

Context and recent enforcement in Louisiana

The LGCB’s letter follows a number of other states that have sent warnings to sports betting operators that could launch prediction markets products. Fanatics Markets launched last week, while DraftKings and FanDuel are nearing their launches. Daily fantasy sports operators PrizePicks and Underdog have also launched prediction markets.

Earlier this year, the LGCB gained a vote of confidence in enforcing its state gambling laws after Governor Jeff Landry vetoed a sweepstakes casino ban bill, saying it was not necessary. The LGCB then sent 40 cease-and-desist letters to illegal gambling operators.

Details of the Louisiana prediction markets warning

While the LGCB letter said “sports and other event contracts may be offered in Louisiana only if the offering entity possesses a sports wagering gaming licence”, it also notes the sports betting operators are largely working with other companies to offer the products.

“No person or entity may offer, accept, facilitate or in any way enable sports wagering in Louisiana unless the activity is conducted by a licensed or permitted operator through an approved sports wagering platform and exclusively on an event included in the board’s Sports Wagering Catalogue,” the letter reads. “Any event-style ‘contract’, ‘swap’, ‘market’ or other ‘financial instrument’ that allows individuals to stake value on the outcome of a sporting event, other than a board-licensed or permitted sports wagering operators, constitutes illegal gambling.”

The LGCB said it does not view sports event contracts as commodities transactions regulated by the federal Commodity Futures Trading Commission. Leading prediction markets operators like Kalshi argue that the CFTC regulates their products and they can operate nationwide. Kalshi is fighting multiple lawsuits against state regulators across the US.

“Not only is such activity illegal under Louisiana law, but the Commodities Exchange Act and the CFTC’s regulations prohibit event contracts related to gaming and activities which are illegal under state law,” the letter reads. “As it is the board’s position that these contracts are both gaming and illegal, the board sees no defence to offering such activity pursuant to a CFTC licence.”

It warns that any violation of the Louisiana Gaming Control Law could affect licensure. The letter also notes gambling law violations in other states could affect regulatory suitability.

Prediction markets lawsuits involving Kalshi

Prediction markets have garnered attention from regulators across the US, especially as sportsbook operators begin to roll out product offerings.

More than 20 lawsuits tied to prediction markets are active nationwide, many pitting Kalshi against state regulators. There are also tribal arguments that prediction markets violate the Indian Gaming Regulatory Act.

Last week, Connecticut became the latest state to see a prediction markets lawsuit filed, joining states including Maryland, Nevada, New Jersey, New York and Ohio.

A Massachusetts court will hold a hearing this week. Attorney General Andrea Campbell filed a lawsuit against Kalshi earlier this year.

That comes after a Nevada judge last month reversed his earlier decision that had granted Kalshi a preliminary injunction preventing state regulatory action.

The legal consideration about prediction markets comes as operators like Kalshi and Polymarket continue to break further into the mainstream. Kalshi announced a $1 billion funding round last week, bringing its valuation to $11 billion.

About the reporter

Pat covers the legislation and regulation of online gambling in North and South America, having covered the US sports betting industry extensively since 2019.