Louisiana's gaming regulators have recently issued a warning regarding prediction markets, asserting that contracts for sports events qualify as sports betting under state law. In a letter sent last week, Louisiana Gaming Control Board chair Christopher Hebert addressed licensees potentially interested in prediction markets and event-based contracts.
The letter clarifies the board’s stance that such activities fall within the definition of sports wagering under Louisiana law, and thus they must comply with state gaming regulations and operate under a valid Louisiana license or permit.
The advisory emphasizes that any involvement—whether direct or indirect—in the running or facilitating of sports event contracts could jeopardize a regulated party’s licensure or permitting status in the state. This position aligns Louisiana with a growing number of states that aim to classify prediction markets as traditional gambling operations.
This warning follows a trend in several states advising sports betting operators about potential launch risks associated with prediction market products. Fanatics Markets launched its prediction market last week, while competitors DraftKings and FanDuel are close to launching their respective products. Daily fantasy sports companies like PrizePicks and Underdog have already introduced similar offerings.
Earlier this year, the Louisiana Gaming Control Board bolstered its regulatory authority after Governor Jeff Landry vetoed a bill aimed at banning sweepstakes casinos, deeming it unnecessary. Subsequently, the LGCB issued 40 cease-and-desist notices to illegal gambling entities.
According to the LGCB letter, “sports and other event contracts may be offered in Louisiana only if the offering entity possesses a sports wagering gaming license.” The letter highlights that most sports betting operators are collaborating with other companies to provide these products.
It states, “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.” Any event-based “contract,” “swap,” “market,” or other “financial instrument” that permits individuals to wager on the outcome of a sporting event—outside of a board-licensed operator—is considered illegal gambling.
The LGCB does not categorize sports event contracts as commodities transactions governed by the federal Commodity Futures Trading Commission (CFTC). Companies like Kalshi maintain that their products fall under CFTC oversight, arguing for operational legitimacy nationwide while facing multiple lawsuits from state regulators.
The LGCB's communication highlights that not only are such practices illegal per Louisiana law, but regulations under the Commodities Exchange Act and the CFTC prohibit event contracts related to illegal gaming activities. The board firmly believes there's no justification for offering these contracts under a CFTC license. An affirmation indicates that violations of Louisiana Gaming Control Law could affect a party’s licensure, with potential implications from violations in other states as well.
The area of prediction markets is under scrutiny across the U.S., especially with sportsbooks beginning to roll out new product lines. Currently, more than 20 lawsuits connected to prediction markets are active nationwide, with many involving Kalshi against various state regulators. Tribal entities also argue that these markets infringe upon the Indian Gaming Regulatory Act.
Recently, Connecticut saw a new prediction markets lawsuit, bringing the total to several states, including Maryland, Nevada, New Jersey, New York, and Ohio. A Massachusetts court is set to hold a hearing this week, following a previous lawsuit filed against Kalshi by Attorney General Andrea Campbell. This follows a Nevada judge’s recent reversal of a preliminary injunction that had initially favored Kalshi, temporarily halting state regulatory actions against them.
As operators like Kalshi and Polymarket continue to expand in popularity, Kalshi recently announced a $1 billion funding round, raising its valuation to $11 billion.
