Ohio Warns Sportsbook Operators About Offering Prediction Markets

In a new letter, the Ohio Casino Control Commission (OCCC) has issued a stern warning to licensed sportsbook operators, stating that participation in prediction markets related to sporting events could put their ability to operate in the state at risk.

Ohio Warns Sportsbook Operators

According to the letter, if an Ohio sports gaming licensee chooses to offer sporting event contracts in the state, or if they directly or indirectly partner, coordinate, or associate with entities involved in offering such contracts, these actions will be taken into account when assessing the licensee’s ongoing suitability to hold a sports gaming license. This is also the case even if they either operate through their own Designated Contract Market (DCM) or Futures Commission Merchant (FCM), or through entities under common ownership or related operations.

Ohio boasts one of the biggest legal sports betting markets in the US. The recent letter comes at a time when the state is increasing its control over the sector. For example, earlier this month, Ohio’s governor called for banning prop bets as concerns over player harassment, especially in college sports, increases.

What Complexities Does This Letter Entail?

The letter did not make clear whether obtaining a second license would be necessary for offering prediction markets, or if operators with an existing license could conduct prediction markets under that same license. Additionally, this could impact operators already using prediction markets in other states, as the letter noted that limiting access to Ohio residents “may not alleviate the suitability concern,” depending on the situation.

Ohio’s strict stance complicates the industry’s efforts to expand into prediction markets, which some operators view as a profitable extension of sports betting. This follows one of the largest prediction markets, Kalshi, making its entry into sports betting earlier this month.

The OCCC’s letter clearly states that Ohio will not tolerate sportsbooks collaborating with such platforms or creating separate prediction market offerings without explicit authorization. Ohio is not alone in expressing concerns, as it is one of seven states that have issued cease-and-desist letters to prediction markets, including Kalshi, for allegedly engaging in what regulators classify as illegal sports betting.

In theory, the letter leaves the door open for sportsbooks to navigate the issue. They can either obtain a separate sports betting license for prediction markets or attempt to gain approval for such offerings under an existing license. However, it remains unclear whether either approach would satisfy regulatory requirements. This puts sportsbooks in a difficult position, as they can either explore new revenue opportunities through prediction contracts and risk regulatory consequences or avoid them altogether to safeguard their current licenses.