Federal Agencies Intervene in State-Level Prediction Market Battles
The U.S. Justice Department and the Commodity Futures Trading Commission (CFTC) filed a federal lawsuit against Arkansas on November 12 to block the state's gambling-law enforcement against Kalshi, escalating a nationwide jurisdictional battle over prediction markets.
The federal complaint, filed in the U.S. District Court for the Eastern District of Arkansas, names Attorney General Tim Griffin as a defendant. The plaintiffs argue that the Commodity Exchange Act grants the CFTC "exclusive jurisdiction" over event contracts, displacing state authority, The Defiant Team at The Defiant reported. The DOJ and CFTC assert that forcing exchanges to deny access to Arkansas residents directly conflicts with federal impartial-access requirements. The suit seeks preliminary and permanent injunctions to protect all CFTC-regulated entities and their affiliates from state-level investigations tied to transactions executed on federally regulated exchanges.
Louisiana Launches Sweeping Crackdown
The federal intervention arrives just as another state launches a massive offensive. Louisiana Attorney General Liz Murrill filed a sweeping lawsuit in the 21st Judicial District Court against nearly every major prediction market operator, including Kalshi, Polymarket, Robinhood, Crypto.com, Underdog, Novig, and ProphetX, according to Eric Ramsey at The Event Horizon. Murrill stated that operators without a licensed gaming permit are committing a crime subject to jail time and significant penalties.
A court order in the Louisiana case dictates that the named operators must geofence the state and are temporarily restrained from offering any event contracts to residents. Kalshi immediately responded by filing a motion for a preliminary injunction in the U.S. District Court for the Western District of Louisiana, seeking a temporary restraining order to prevent the state from pursuing action against its operations.
This legal tug-of-war highlights the growing friction between state gambling regulators and federal agencies. The CFTC previously initiated similar suits to block state restrictions in Arizona and Utah. As the regulatory landscape fractures, traders often rely on a Kalshi vs. Polymarket comparison to understand platform availability, or seek out the best Kalshi tools to manage their positions amid sudden geofencing risks.