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Ohio regulators are tightening the leash on mobile sports betting, turning their legal attention toward the prediction market Kalshi.
The Ohio Casino Control Commission moved this week to fine Kalshi $5 million, alleging the platform operates as an illegal sports gambling outlet. The penalty follows criminal charges filed by Arizona in March, which alleged Kalshi ran an unauthorized gambling operation and violated state law by permitting wagers on elections.
Prosecution of the Arizona charges is currently paused. A federal judge issued a temporary restraining order after the Trump administration sued the state, arguing Arizona lacks standing because Kalshi is overseen by the Commodity Futures Trading Commission under the Commodity Exchange Act.
Congress passed the Commodity Exchange Act in 1936.
Ohio AG rejects CFTC shield
According to an article by Crowdfund Insider, the Ohio Casino Control Commission issued a statement regarding the legal dispute:
“The commission takes its regulatory responsibilities to ensure compliance with the law and the integrity of sports gaming in Ohio seriously. Kalshi’s refusal to stop offering sports gaming in Ohio necessitated the commission take action to uphold the requirements of Ohio law.”
Kalshi sought a temporary restraining order against Ohio last month, but a judge denied the request. Ohio Attorney General Dave Yost praised the ruling, arguing the Commodity Exchange Act does not shield the company from state litigation.
“Kalshi argued the federal Commodity Exchange Act preempts enforcement of Ohio law. Nope,” Yost said. “These ‘prediction markets’ have exploded and look an awful lot like gambling. Big win for Ohio!”
A growing jurisdictional battle
The last two months have seen a surge in legal and political maneuvers against prediction markets. Several congressional bills have been introduced to restrict platforms that critics label as gambling. However, CFTC Chairman Michael Selig, a Trump appointee, has publicly defended the industry, maintaining that platforms like Kalshi and Polymarket offer legitimate derivative swaps under federal purview.
The Trump administration maintains close ties to the industry; Donald Trump Jr. serves as a top advisor for Polymarket. This relationship makes federal restrictive legislation unlikely to be signed during the president’s second term. Nevertheless, the pushback from Ohio—a state that voted for Trump 55.2% to 43.9% in the 2024 election—signals a bipartisan appetite for state-level regulation.
