Louisiana Demands Prediction Markets Halt Operations

A judge in Louisiana has ordered that prediction markets immediately suspend their operations within the Bayou State.

On Thursday (Nov. 12), Louisiana Attorney General Liz Murrill secured a temporary restraining order from Tangipahoa Parish Judge Jeffrey Johnson directing prediction markets to suspend their business operations. Murrill petitioned the court on claims that prediction markets regulated by the Commodity Futures Trading Commission (CFTC) are violating Louisiana’s gaming laws.

“[Prediction market] operators’ attempts to make up new words to evade state gambling laws, regulators, and taxes are not fooling anyone,” the attorney general added.

In his ruling, Johnson said Murrill is “entitled to her requested immediate relief.” The judge agreed with the attorney general that the defendants’ “illegal conduct is immediately and irreparably harming the State in its sovereign capacity, as well as its citizens.”

Platforms Dismiss Order

As of early Friday (Nov. 13), the prediction markets named in the state restraining order remained accessible to users in Louisiana. The federally regulated platforms contend that their CFTC licenses preempt state gaming laws under the Supremacy Clause.

Attorneys for prediction markets responded that the platforms are under the “exclusive” jurisdiction of the federal government and not subject to state directives regarding their operations.

Earlier this week, CFTC Chair Michael Selig instructed prediction markets holding designated contract market (DCM) licenses to make sure that their platforms are accessible throughout the country. The advisory came after certain prediction markets geofenced their online exchanges from certain states where they were threatened with legal action or court orders.

“Derivatives markets must operate on a uniform basis at a national scale in order to achieve the purposes set out in the Commodity Exchange Act. Geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements,” said Selig.

Murrill believes many contracts being traded on prediction markets constitute gambling and therefore the platforms are engaged in illegal betting.

“In today’s digital betting market, virtually anything can become a wager. For too long, [prediction markets] have violated our laws with impunity. No longer,” said Murrill.

Johnson set a hearing for the state’s motion for preliminary injunction for Nov. 30 at 9 a.m.  

State Lawsuits

Louisiana is among more than a dozen states that have turned to their court systems to block prediction markets from operating within their borders.

Along with claims that prediction markets violate state gaming laws, attorneys general have alleged that the platforms run afoul of consumer protection laws.