The U.S. Commodity Futures Trading Commission and Justice Department have opened two federal cases against Arkansas and Louisiana, asking courts to stop state officials from restricting event contracts offered through federally regulated prediction markets. The Arkansas complaint was filed on November 12, followed by the Louisiana complaint on November 13. Together, the cases escalate a long-running jurisdictional dispute: whether contracts tied to outcomes such as elections or sports are derivatives governed principally by federal law or gambling products subject to state licensing rules.

Arkansas action centers on Kalshi

Arkansas Attorney General Tim Griffin sued Kalshi on November 4, alleging that the company operates an unlicensed gambling platform and offers sports wagers in violation of state law. His office is seeking an injunction, civil penalties, restitution and taxes. Kalshi is registered with the CFTC as a designated contract market, and the federal complaint argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over the event contracts at issue. The federal government is asking the U.S. District Court for the Eastern District of Arkansas for declaratory and injunctive relief.

Related reporting: Utah Files 14 Criminal Charges Against Kalshi and Its Co-Founders

The CFTC characterized Arkansas as the eleventh state it has sued while defending federal jurisdiction over registered derivatives exchanges. That count reflects the regulator's own litigation tally, not a court ruling that every challenged contract is lawful. Arkansas has not conceded the federal preemption claim, and the state case describes the products as gambling rather than swaps.

Louisiana order reaches more than 30 entities

The Louisiana dispute is broader. A state court issued a temporary restraining order on November 12 after Louisiana sued Kalshi, Polymarket, Robinhood, Coinbase and other companies connected to prediction-market access. The federal complaint says the state action named 32 entities, while independent reporting described the temporary order as covering 31. The CFTC's filing says the order effectively halted operations without advance notice or an opportunity for the affected companies to be heard. It asks the federal court in New Orleans to block Louisiana from applying the order to CFTC-regulated markets and intermediaries.

Federal preemption is the central question

The federal government argues that Congress created a national framework for swaps and designated contract markets, leaving the CFTC with exclusive authority over covered transactions. Arkansas and Louisiana are relying on state gambling and consumer-protection powers. The distinction matters beyond the named companies: a ruling could affect whether a federally regulated platform can offer the same contract nationwide or must comply with separate state prohibitions.

The lawsuits do not establish that all prediction-market contracts are permissible. Federal law itself allows the CFTC to review and prohibit certain event contracts, and individual contracts can raise separate questions about gaming, manipulation and the public interest. The new complaints instead focus on which regulator gets to make and enforce those decisions when a contract trades on a federally registered venue.

What happens next

Both federal courts will first consider requests for interim relief before reaching the merits. Louisiana's temporary order is also subject to further state-court proceedings. Until judges rule, the parties' claims remain contested and the practical effect can differ by company and jurisdiction. The immediate signals to watch are whether the federal courts suspend state enforcement, how narrowly any injunction is written, and whether the cases proceed toward appellate review of the Commodity Exchange Act's preemption provisions.

Sources

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