Kalshi's federal preemption claim reaches Louisiana's own courts

In December 2025, Christopher Hebert wrote a letter. As chair of the Louisiana Gaming Control Board, he addressed it to the state's licensed sportsbooks and told them plainly: offering prediction markets on sports events breaks state law and may cost them their gaming licenses. That letter is now Exhibit A in a federal lawsuit.

Kalshi filed its complaint in the US District Court for the Western District of Louisiana, naming Hebert, Governor Jeff Landry, Attorney General Liz Murrill, and enforcement officials from the state police gaming division. The company is seeking a temporary restraining order and preliminary and permanent injunctions. Its theory is straightforward: Louisiana has made clear it intends to treat federally regulated event contracts as illegal gambling, and the Supremacy Clause forbids it from doing so.

The legal architecture Kalshi is invoking matters. The Commodity Exchange Act, as amended by Dodd-Frank, vests the CFTC with exclusive jurisdiction over event contracts listed on a designated contract market. Kalshi holds that designation. The argument is that Louisiana cannot criminalize conduct the federal government has specifically licensed, regardless of how state law defines the underlying activity. The exemption Kalshi points to is already in Louisiana's own statute — the law excludes futures, commodities, and similar instruments traded on an exchange from its gambling-by-computer prohibition. Kalshi says it falls squarely within that carve-out. Louisiana's enforcement posture says otherwise.

What gives this filing its particular weight are the two bills Governor Landry signed in May 2026. House Bill 53 elevated gambling-by-computer to a racketeering offense carrying up to fifty years' imprisonment. House Bill 883 expanded the definition of the underlying conduct. Kalshi's complaint notes that both statutes authorize injunctions, asset freezes, and civil enforcement against not only operators but payment processors, geolocation providers, and media affiliates. That exposure radius is what makes the preemption argument something more than a jurisdictional formality — it is a structural question about whether a state racketeering framework can be brought to bear on federally licensed financial infrastructure.

The filing lands in the Fifth Circuit's jurisdiction, which is not an incidental fact. The Fifth Circuit has already drawn a sharper line than any other federal appellate court on the boundary between CFTC authority and state gambling regulation. How the Western District of Louisiana reads that line, and whether a preliminary injunction issues before any enforcement action, will tell the industry more about that circuit's appetite than any brief filed at the appellate level.

New York is working a parallel track. The New York State Gaming Commission petitioned Manhattan's Supreme Court on October 22 to compel Kalshi to produce records under investigative subpoenas issued in July under the Racing, Pari-Mutuel Wagering and Breeding Law. What the commission wants is specific: sports event contract documentation, advertising materials, records of offerings made to users under twenty-one, and corporate ownership information. Kalshi has objected on grounds that a gaming-age framework is inapplicable to a CFTC-regulated exchange — a position that is legally coherent but does nothing to narrow the underlying dispute about what Kalshi actually is.

The preemption claim Kalshi is pressing in Louisiana and resisting in New York is the same claim at its foundation. Federal designation as a contract market either displaces state gambling authority or it does not. Courts in two different circuits are now positioned to answer that question on different procedural schedules, with different factual records, under pressure from state officials who have made their view of the answer entirely clear.