Louisiana Gaming Control Board (LGCB) recently issued a decisive advisory declaring that sports event contracts are classified as sports betting under state law. This move underscores the state’s rigorous approach to regulating gambling activities within its borders.
Last week, Christopher Hebert, chair of the LGCB, sent an advisory letter to licensees potentially interested in exploring prediction markets or similar event-based contracts. The letter makes it unequivocally clear: such activities are deemed sports wagering under Louisiana law and currently operate outside the legal framework established by the state’s Gaming Control laws.
The communication warns that any involvement, whether direct or indirect, in facilitating sports event contracts could jeopardize the licensure of regulated parties within the state. This advisory places Louisiana among a growing number of states aiming to regulate prediction markets under traditional gambling laws, effectively urging operators to align with existing legal standards.
This regulatory stance arrives amid the launch of new prediction markets by major players in the sports betting industry. Fanatics Markets debuted its offerings last week, while other industry leaders like DraftKings and FanDuel are poised to enter the market soon. Additionally, daily fantasy sports companies, such as PrizePicks and Underdog, have already launched prediction market products, further intensifying the regulatory landscape.
Earlier this year, Governor Jeff Landry bolstered the LGCB’s authority by vetoing a bill that aimed to ban sweepstakes casinos, reinforcing the board’s active role in enforcing gambling laws in the state. Following this, the LGCB issued 40 cease-and-desist letters to operators violating these laws, signaling its commitment to stringent oversight.
The LGCB clarified in its recent advisory that sports and event contracts can only be offered in Louisiana by entities with a valid sports wagering gaming license. The board’s communication emphasized that no person or entity may engage in sports wagering activities unless conducted through licensed operators using approved platforms, exclusively for events listed in the board’s Sports Wagering Catalogue.
In a notable point of contention, the LGCB stated that it does not recognize sports event contracts as commodities transactions under the jurisdiction of the federal Commodity Futures Trading Commission (CFTC). This position challenges the stance of leading prediction market operators like Kalshi, who assert that their products are regulated by the CFTC, allowing them to operate across the nation. Kalshi is currently embroiled in multiple lawsuits against state regulators, arguing for their right to function under CFTC regulations.
The LGCB’s advisory underscores that any activities deemed illegal under Louisiana law, including those regulated by the CFTC, fall outside permissible operations. The board maintains that these contracts are both gambling and illegal, offering no defence for their operation under a CFTC license.
The advisory further cautions that violations of Louisiana’s Gaming Control Law could negatively impact licensure and that legal issues in other states could similarly affect an operator’s regulatory standing.
Prediction markets, which enable individuals to stake money on the outcomes of events, have attracted increasing scrutiny from regulators across the United States. With more than 20 active lawsuits, these markets often face legal challenges, particularly from state regulators confronting operators like Kalshi.
Recently, Connecticut joined a list of states—including Maryland, Nevada, New Jersey, New York, and Ohio—where prediction market lawsuits are pending. This expanding legal landscape reflects the complexity and contentiousness surrounding the regulation of prediction markets.
A Massachusetts court is set to hear a case involving prediction markets this week, further highlighting the ongoing legal battles. Massachusetts Attorney General Andrea Campbell filed a suit against Kalshi earlier this year, adding to the growing list of legal challenges faced by prediction market operators.
The legal discourse surrounding prediction markets is intensifying as companies like Kalshi and Polymarket gain mainstream visibility. Kalshi recently announced a significant $1 billion funding round, elevating its valuation to $11 billion, underscoring the financial stakes involved in this burgeoning sector.
As prediction markets continue to evolve, Louisiana’s definitive stance serves as a critical reminder of the complex interplay between state regulations and emerging market innovations. Industry observers are keenly watching how these legal and regulatory frameworks will adapt to accommodate—or restrict—the growth of prediction markets within the broader gambling industry.
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