Louisiana has issued a warning to operators of sports-linked prediction markets, deeming them illegal if offered outside licensed sportsbooks.
In a letter dated December 5, LGCB chair Christopher Hebert told companies that “event contracts” on games and player performance fall under state sports wagering laws.
The directive applies even if the contracts are marketed as “financial instruments” or traded on federally regulated platforms.
Federal vs. State Oversight
The board emphasized that its authority covers all gaming activity in Louisiana.
Hebert stated that contracts based on game results meet state gambling definitions, regardless of any Commodity Futures Trading Commission (CFTC) oversight.
Companies wishing to operate in Louisiana must comply with all state betting regulations, including licensing, KYC, and responsible gambling rules.
National Sports Betting Players in Focus
DraftKings, FanDuel, and Fanatics have incorporated prediction-style products alongside traditional sports betting in other states.
Louisiana’s letter specifically warns that routing in-state customers to these contracts will be treated as unlicensed gambling.
The guidance stops short of regulating operators nationally but clearly outlines compliance expectations within Louisiana.
Growing Jurisdictional Disputes
The warning reflects broader tensions between federal and state regulators over predictive platforms.
CFTC-regulated exchanges, such as Kalshi and Polymarket, treat event contracts as financial derivatives rather than bets.
However, sports-based contracts increasingly attract state scrutiny.
In Nevada, a federal judge recently ruled that Kalshi’s sports markets qualify as gambling, enabling state regulators to enforce restrictions.
Other states, including Maryland and Illinois, have issued similar cautions, questioning whether CFTC registration shields operators from state law.
Compliance Risks and Industry Implications
Louisiana’s stance demonstrates that state law prevails over federal classifications when it comes to local gambling regulations.
Operators steering residents into prohibited contracts could face fines or restrictions on their licenses.
The decision adds to a fragmented US landscape for prediction markets, highlighting the legal complexity for companies seeking national reach.
Until federal and state regulators align, sports event contracts will remain a legal grey area, with growing risk for non-compliant operators.
