On November 13, Liz Murrill, the Attorney General of Louisiana, was cited by several Chinese crypto media outlets, stating that she had filed lawsuits in state court against the prediction market platforms Kalshi, Polymarket, as well as various online operators such as Robinhood, Coinbase, Gemini, and Crypto.com, collectively labeling them as “illegal online gambling operators.” The core allegation is that the “event contracts” designed around the results of real-world events on these platforms are suspected of violating local gambling and sports betting laws. According to translations of her posts on the X platform and local reports, this state-level lawsuit simultaneously seeks an immediate issuance of restraining orders and injunctions, intending to freeze related operations before the substantive hearing of the case. However, key procedural information regarding whether the restraining orders and injunctions have been approved by the court and the subsequent court date has not yet appeared in public reports. Chinese media outlets, including TechFlow, Odaily, and PANews, amplified this news almost simultaneously, causing the debate initially confined to the regulatory context in the United States regarding whether “event contracts are financial instruments or gambling products” to suddenly enter the spotlight of the crypto industry through the strong characterization by the Attorney General. Louisiana’s choice to incorporate prediction markets with gambling and sports betting under the same regulatory framework provides an extremely conservative answer at the state level, directly impacting the business legitimacy of event contract platforms represented by Kalshi and Polymarket, while also pushing the mainstream crypto and fintech platforms listed as defendants toward the edge of local gambling regulation, forcing the entire industry to reassess the position of prediction markets in the regulatory coordinates of various states in the U.S.
Louisiana Labels Event Contracts as Gambling
In this lawsuit, Liz Murrill did not treat platforms like Kalshi and Polymarket as technology companies offering “new financial products,” but directly referred to them in the complaint as “illegal online gambling operators.” According to translations of the complaint’s content by Chinese media, she regarded the event contract trading by users around elections, economic data, sports events, and other results as actions that violate Louisiana’s gambling and sports betting laws, essentially viewing each “event contract” as a betting ticket on real-world outcomes, rather than as a contractual arrangement with financial or informational functions. In other words, any platform allowing residents of the state to stake real money on external event outcomes is categorized under the same legal framework as traditional online casinos and sports betting sites.
This characterization also explains Louisiana's choice to utilize its own gambling and sports betting laws rather than discussing the financial regulatory attributes of these contracts: the regulatory issue has been simplified to “whether there has been unauthorized online gambling or sports betting services provided within the state,” instead of “whether these contracts are more like derivatives or securities.” However, for the platforms, their long-term narrative they’ve attempted to shape is quite the opposite—event contracts are marketed as tools to help users hedge real-world risks and aggregate dispersed information, aligning more closely with financial regulatory logic in discussions in some states. Louisiana’s decision to categorize event contracts entirely as gambling amplifies this narrative conflict: the same product can be treated as a financial market instrument in some states and as a gambling game in others, with Louisiana clearly choosing the latter position.
Kalshi and Polymarket Highlight Multi-Platform Issues
In the narrative from the Attorney General of Louisiana, Kalshi and Polymarket serve as the “face” of this case—they are typical prediction market platforms designed around event outcomes and are the core targets publicly named. In her statements, the Attorney General pointed to these products that trade around real-world event outcomes as “gambling,” and accordingly accused them of violating local gambling and sports betting laws, requesting the court to issue restraining orders and injunctions to drag event contracts that originally operated in a regulatory gray area directly into the framework of “illegal online gambling operators.”
However, the list did not stop at these two niche prediction markets. According to public reports, other defendants include mainstream crypto and fintech platforms aimed at the general public, such as Robinhood, Coinbase, Gemini, and Crypto.com. Although the complete list and total number have not been disclosed, they have, just like Kalshi and Polymarket, been labeled as “illegal online gambling operators.” The Attorney General’s use of the same legal characterization for these various types of platforms is itself a strong signal: she does not intend to make fine distinctions in business models but rather focuses regulatory scrutiny on “online betting products around event outcomes.” As long as a platform provides or touches such products for users within the state, it may be subject to the same enforcement narrative. This means Louisiana is not merely dealing with a few marginal websites but is leveraging Kalshi and Polymarket to bring mainstream trading applications into a redefining of the boundaries of “online gambling.”
Deterrent Signals of Restraining Orders and Injunctions
In this state-level lawsuit initiated by the Attorney General of Louisiana, according to translations by Chinese crypto media, the complaint is not satisfied with just post-factum accountability but directly requests the court to “immediately issue restraining orders and injunctions.” In U.S. civil procedures, such temporary restraining orders or preliminary injunctions are fundamentally aimed at pausing the defendant's related business in a specific jurisdiction before the substantive hearing of the case, preventing the alleged illegal conduct identified by the plaintiff from continuing while the court has yet to decide. For Kalshi, Polymarket, and the other defendants like Robinhood, Coinbase, Gemini, and Crypto.com, accused of being “illegal online gambling operators,” this demand is itself a strong signal: the state prosecutorial agency is not prepared to wait for a protracted trial process; instead, it intends to prioritize the lockdown of business entrances and product forms within Louisiana, demanding that the platforms halt operations first and discuss later.
If such restraining orders or injunctions are approved, it typically means that before the final outcome of the case is known, the defendant platforms in Louisiana related to “online betting products around event outcomes” will face immediate pressure to contract or even completely cease operations; otherwise, they could face additional legal risks for violating court orders. For prediction markets and crypto trading applications relying on national user coverage, this type of state-level temporary measure carries deterrent power not only concerning the market size of a single state but also in the template it sets for other state regulators: when legal characterizations remain contentious, local access paths can be rapidly frozen using procedural tools. However, currently, public information has not disclosed whether the restraining orders and injunctions have been approved, whether hearings have been scheduled, or other key details, making it impossible for the outside world to determine whether these procedural instruments have truly been implemented. One can only view “whether the restraining orders take effect and when they will be reviewed” as a key variable in observing the intensity of Louisiana's current enforcement and its demonstrative effect.
New Red Lines for Prediction Markets from the Gambling Law Perspective
In the broader context of state law in the United States, there has been no uniform answer regarding whether “event contracts” constitute a financial information market or are fundamentally betting: some states prefer to interpret them as financial instruments, while others lean toward categorizing them under gambling or gaming. The lack of federal-level unified rules means that different states can employ their own gambling laws to characterize the same product completely differently. Once a platform reaches users across state lines, it must navigate local regulatory logic within each state, making this “puzzle-like compliance” itself keep prediction markets long locked in a gray area.
Louisiana's choice to describe Kalshi, Polymarket, and online operators like Robinhood, Coinbase, Gemini, and Crypto.com as “illegal online gambling operators,” and to accuse relevant event contracts of violating the state’s gambling and sports betting laws, formally declares: from its perspective, contracts around event outcomes should fall under the same regulatory framework as traditional sports betting. This not only tightens the local tolerance for prediction markets but also establishes a replicable template for other states—once an event outcome is deemed as “betting,” the regulatory path can prioritize gambling laws over financial regulations. For crypto products and broader financial innovations centered on event contracts, this state-level “gambling law path” means that design space will be sliced by state lines: one side faces increasingly detailed geographical restrictions and the costs of product separation, while the other side is the ever-present risk of being labeled “illegal gambling” by a state Attorney General, making the ability to withstand state-level gambling regulation a core question whether innovations in event contracts have national commercial prospects.
How Will Platform Compliance Lines Be Redrawn?
For Kalshi, Polymarket, and those dragged into the lawsuit such as Robinhood, Coinbase, Gemini, and Crypto.com, being collectively labeled as “illegal online gambling operators” by the Attorney General of Louisiana in state court will force them to re-evaluate the costs of geographical compliance, product design, and risk disclosure: on one end, there is a need to finely divide access permissions by state and block users from “high-risk states” like Louisiana from accessing relevant event contracts, or even outright taking certain controversial products offline nationwide; on the other end, there are adjustments to event designs, weakening structures that closely resemble gambling and sports betting, and highlighting in risk disclosures that “there is significant uncertainty in legal recognition across states” and “services are not provided in certain areas” to lower the potential for being accused again in other states. Research brief notes that the subjects involved in this case span crypto exchanges, prediction markets, and fintech platforms; this kind of “one-fell-swoop” litigation could easily be viewed as a template by other state regulators and at the federal level, whether in follow-up investigations or in attempting similar gambling law pathways, and it could also push industry self-regulatory organizations to label event contracts with finer classifications and warnings. Louisiana has already placed the “more stringent option” on the table. However, the research brief also reminds that currently only “the fact that a lawsuit has been filed in state court” is public, with case numbers, courts of jurisdiction, specific legal provisions, hearing schedules and judgments, and whether the restraining orders have been finally approved remaining in an information vacuum. The platforms will need to decide whether to seek a settlement for clearer boundaries or to persist in defending for a favorable precedent, which will directly shape the compliance landscape in the coming years. Therefore, before the key pieces regarding the direction of the lawsuit, restraining order results, and platform strategies are revealed, how the compliance lines for event contracts and related crypto products have been redrawn remains an open question with no standard answer.
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