Kalshi Sues Ohio Regulators Over Limits on Prediction Market Activities

The lawsuit, filed on October 7 in the US District Court for the Southern District of Ohio, seeks both temporary and permanent injunctions to prevent the state from enforcing its cease-and-desist directiveImage Source: Shutterstock.com

Kalshi, an online prediction market, has ngaken legal action in a federal court against the Ohio Casino Control Commissionand 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 Courtin 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. Kalshisays Ohio’s recent stepshave led to confusion for potential business collaborators and could harm its reputation across the US market.

Kalshioperates 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 OCCCsent a notice to Kalshito stop its activities. They claimed Kalshi’s event contracts on sports results were unlicensed gambling. The commission warned Ohio’s licensed sportsbooksthat teaming up with Kalshimight 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 lawsuitsaid 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 teambelieves 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 explainedthat ngaking 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. Kalshihas also dealt with opposition in other states like New Jersey, Nevada, and Massachusetts. Officials in these states argue that Kalshioperates 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.