Kalshi has filed suit against the Ohio Casino Control Commission and the state Attorney General’s office
Kalshi lawyers argue that the state is overstepping its authority by preventing them from offering prediction markets on sports
Ohio regulators issued a cease-and-desist letter, insisting that Kalshi is offering unlicensed sports betting
The ongoing battle between prediction markets and state gambling regulators is heating up in Ohio. Prediction market operator Kalshi has filed suit against the Ohio Casino Control Commission (OCCC) and the state Attorney General’s office.
The lawsuit was filed on October 7
in the U.S. District Court for the Southern District of Ohio in Columbus. The case has been assigned to Chief Judge Sarah D. Morrison.
Kalshi's lawyers argue that the state is overstepping its authority by preventing them from offering prediction markets on sports events.
Kalshi is seeking both a preliminary and permanent injunction that would prevent the two state agencies from enforcing state law against the company. Prediction market sites, such as Kalshi, are operating under federal regulations set by the Commodity Futures Trading Commission (CFTC). They believe that a federal law supersedes a state regulator.
"This action challenges the State of Ohio's intrusion into the federal government's exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission (CFTC)," the suit reads. "Two Ohio agencies seek to prevent plaintiff Kalshi from offering event contracts for trading on its federally regulated exchange."
In its cease and desist order, the Ohio Attorney General's office threatened to take legal action against Kalshi.
"Defendant's actions threaten immediate and irreparable harm, not just to Kalshi, but to its customers and commercial counterparties," the suit argues. "Defendant's acts also impair Kalshi's existing contracts with consumers and business partners.
"Some of these prospective business partners have millions of active users. The loss of these users, should the business partners acquiesce to the Casino Commission’s unlawful threat, would present a massive disruption for Kalshi financially and reputationally."
All of these arguments must still be proven in court.
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Ohio regulators insist that federal law can't overstep state law
Countering Kalshi's main argument, the OCCC insists that the belief that federal regulations don't cancel out existing state laws is unconvincing.
"The Commission is unpersuaded that Ohio law is preempted by federal law as Kalshi contends," Matthew Schuler, executive director of the casino commission, wrote in an Oct. 6 letter sent to Kalshi. "Consequently, to the extent Kalshi chooses to continue to offer unlicensed and unregulated sports gaming in the form of sporting event contracts within Ohio, Kalshi will be violating Ohio law."
Kalshi's lawyers are seeking a temporary restraining order. They are also seeking an immediate court hearing on this matter. This injunction would serve to prevent the state from implementing its plan to stop Kalshi from operating on Oct. 20.
Following Michigan's lead, Ohio gambling regulators are also threatening to pull the license of any sports betting sites operating in the state if they opt to venture into the prediction market industry.
There is now legal action involving five states and Kalshi
Ohio is one of five US states that are now involved in legal action with Kalshi.
Last month, Massachusetts Attorney General Andrea Joy Campbell filed a 43-page lawsuit against the prediction market. The Massachusetts lawsuit accuses Kalshi of promoting and accepting online sports wagers from Massachusetts customers without adhering to state laws governing sports gambling as set out in the licenses issued by the Massachusetts Gaming Commission (MGC).
There is also ongoing litigation involving Kalshi in New Jersey, Maryland, and Nevada.
Massachusetts, Arizona, Illinois, Montana, and Ohio are states that have all issued cease and desist orders against Kalshi.
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