Kalshi, an online prediction market, has taken legal action in a federal court against the Ohio Casino Control Commission and the state Attorney General. The lawsuit claims that Ohio authorities have overstepped their authority by restricting Kalshi’s ability to sell “event contracts” connected to sports results.
Ohio’s Crackdown on Kalshi Sparks Federal Lawsuit Over State Gambling Authority
The complaint submitted on October 7 to the US District Court in the Southern District of Ohio, aims to block the state from enforcing its cease-and-desist order with both temporary and permanent injunctions, reported The Columbus Dispatch. Kalshi says Ohio’s recent steps have led to confusion for potential business collaborators and could harm its reputation across the US market.
Kalshi operates under the jurisdiction of the Commodity Futures Trading Commission (CFTC), which identifies its products as financial futures contracts instead of regular sports bets. The company believes this classification removes it from state gambling laws. Ohio officials, however, disagree and argue that anything resembling sports betting must follow state licensing rules.
In early 2025, the OCCC sent a notice to Kalshi to stop its activities. They claimed Kalshi’s event contracts on sports results were unlicensed gambling. The commission warned Ohio’s licensed sportsbooks that teaming up with Kalshi might put their gaming licenses at risk. Kalshi’s filing mentioned that similar warnings spread to operators outside Ohio, which discouraged partnerships everywhere.
Upcoming Kalshi Hearing May Set National Precedent for Regulation of Sports-Based Markets
Kalshi’s lawsuit said these warnings tried to harm its business relationships by suggesting prediction markets were as risky as illegal or unregulated gambling. The company said these actions go against federal law and disrupt commerce across states.
Ohio Attorney General Dave Yost’s team believes state governments should control sports betting laws within their boundaries. They have backed stricter rules for prediction markets, together with other states. In a court filing, Yost’s office explained that taking away these regulatory powers could put people at risk from unchecked gambling problems.
This argument highlights a brewing conflict between regulated prediction platforms and state gaming board authorities. Kalshi has also dealt with opposition in other states like New Jersey, Nevada, and Massachusetts. Officials in these states argue that Kalshi operates gambling services without a proper license.
As the October 20 hearing gets closer, the result may have a broad impact on how both state and federal laws view prediction markets. If Kalshi wins, it could create a new standard by restricting states from controlling markets already regulated by the CFTC. However, if Ohio wins, it might strengthen the power of states to oversee all types of betting tied to sports.