The Ohio Casino Control Commission (OCCC) has fined prediction market Kalshi $5 million for operating what it considers to be an unauthorized sportsbook.
In Ohio, skill-based entertainment, sports betting, casino gambling, and fantasy sports are all governed by the OCCC. Kalshi's trading contracts concerning the results of athletic events are allegedly considered sports betting by the Commission.
In order to accept bets in the Buckeye State, the online platform must receive a sports wagering license.
“The Commission takes its regulatory responsibilities to ensure compliance with the law and the integrity of sports gaming in Ohio seriously,” the OCCC said in a release.
The Commodity Futures Trading Commission (CTFC) oversees Kalshi on a federal level.
The CFTC has taken steps to ensure that sports event contract trading on prediction markets is allowed under the second Trump administration. However, a number of states have filed lawsuits against the CFTC and prediction markets, claiming that the trading companies violate state gaming regulations.
"Ohio put Kalshi on notice today that its prediction markets are unlawful gaming. A federal court already agreed with our reading of the law,” said Ohio Attorney General Dave Yost. “I wouldn’t bet on how long Kalshi will be operating in Ohio.”
A federal judge said earlier this year that Kalshi's sports prediction markets are unlawful gambling. Judge Sarah Morrison decided that Ohio's right to decide what kinds of gaming are permitted inside its boundaries is not superseded by the Commodity Exchange Act.
Kalshi's Answer
Kalshi persists in arguing that it has the authority, as mandated by the federal government, to enable the purchase and sale of sporting events.
According to a recent note from Jefferies analysts, prediction markets should anticipate federal court defeats in the coming years, particularly if the case makes it to the Supreme Court.
As of right now, the CFTC states that shares related to sports results may be offered by its approved prediction markets, which function as Designated Contract Markets.
“We are disappointed in this latest development, especially considering our ongoing litigation with Ohio and recent rulings in other courts confirming our right to operate as a federally licensed exchange,” a statement from Kalshi read.
In other jurisdictions, Kalshi has received more favorable court decisions. A judge in the District Court of Washington, DC, agreed with the prediction market since its contracts don't qualify as gambling.
According to a federal court in Arizona, Kalshi cannot be charged with illegal gambling by the state. Additionally, the Third Circuit of New Jersey ruled that gaming authorities have no jurisdiction over Kalshi.
OCCC: Kalshi Encourages Sports Betting
The Ohio Casino Control Commission's executive director, Matt Schuler, claims that although Kalshi insists in court that it isn't involved in gambling, its promotional materials present a different picture.
“Kalshi’s marketing materials routinely describe its sports event contract offerings as ‘sports betting’ and compare them to bets offered by major sportsbooks,” said Schuler. “Kalshi’s sports gaming offerings utilize quintessential wagering terminology like spreads, totals, and props.”