The tug-of-war between U.S. regulators and emerging prediction market platforms continues to heat up. Recently, the Louisiana Gaming Control Board (LGCB) issued a stern warning letter, explicitly classifying sports event contracts (i.e., prediction market products) as illegal sports betting, and warned licensed operators that any direct or indirect participation could jeopardize their operating licenses in the state. This move has brought new regulatory pressures to platforms like Kalshi and Polymarket, which are currently in an expansion frenzy.
Official Warning: Prediction Market Contracts are Illegal Gambling
In a letter issued last week by LGCB Chairman Christopher Herbert, the regulatory stance is clear. The letter states, "Sports and other event contracts can only be offered in Louisiana when provided by an entity holding a sports betting license." Any "contracts," "swaps," "markets," or other "financial instruments" that allow individuals to bet on the outcomes of sports events, if not provided by a sports betting operator licensed by the commission, constitute illegal gambling. More severely, the LGCB warns that such violations could even affect the suitability of the parties involved to obtain or maintain other gaming licenses in the state. Simply put, existing casinos or sports betting operators dabbling in the prediction market might even jeopardize their "main business."
Regulatory Logic and Federal Jurisdiction Dispute
The LGCB's letter is not only based on state law but also directly challenges the core legal shield of prediction market platforms. These platforms often claim that their products are "commodities" regulated by the U.S. Commodity Futures Trading Commission (CFTC), and therefore can operate nationwide. However, the Louisiana regulatory body explicitly refutes this argument. The letter states, "The Commodity Exchange Act and CFTC regulations both prohibit contracts involving gambling and activities illegal under state law." The regulators believe that since these contracts are considered gambling and illegal in the state, holding a CFTC license cannot be a defense. According to PASA's official website observation, this highlights the tough stance of state-level regulatory bodies in defending their jurisdiction, adding new battles to the legal conflicts spreading across the U.S.
Prediction Market Expansion and Nationwide Legal Siege Coexist
Louisiana's action is not an isolated case. Currently, there are more than 20 lawsuits involving prediction markets underway across the U.S., with states like Connecticut, Maryland, and New York joining the fray. Just last week, prediction market leader Kalshi announced a financing round of $1 billion, pushing its valuation to $11 billion, a truly astonishing figure. However, behind the glamorous capital story is a harsh regulatory reality. A Massachusetts court will hold a hearing this week, and a Nevada judge overturned a preliminary injunction favorable to Kalshi last month. As traditional sports betting giants like Fanatics Markets also begin to introduce similar products, the focus of regulation is increasingly concentrated. This warning letter from Louisiana is undoubtedly another significant chess piece in the sweeping regulatory storm across the U.S.
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This article is from "PASA-Global iGaming Leader," a gambling industry news channel:https://t.me/pasa_news
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