Kalshi challenges state authority as federal and state laws collide in Ohio.
Kalshi, the federally regulated prediction market platform, has filed a lawsuit against the Ohio Casino Control Commission (OCCC) and the state’s Attorney General, alleging unlawful interference with its operations. The case, initiated on October 7, 2025, argues that Ohio regulators have overstepped their jurisdiction by classifying Kalshi’s event-based contracts as gambling activities requiring state licenses.
At the heart of the dispute lies a complex regulatory question: should prediction markets governed by the Commodity Futures Trading Commission (CFTC) be subject to state gambling laws? Kalshi contends that its markets, approved under federal financial regulation, are legitimate derivatives, not wagers. Ohio, however, insists that any platform allowing predictions tied to sports outcomes constitutes sports betting, a domain it regulates strictly.
The OCCC had earlier issued cease-and-desist letters to sportsbooks partnering with Kalshi, warning of fines or license revocation. Kalshi claims these actions have harmed its business relationships, reduced investor confidence, and violated federal preemption principles. The company is seeking a federal injunction to prevent further restrictions and to confirm that its operations are beyond Ohio’s regulatory reach.
The case, now before the U.S. District Court for the Southern District of Ohio, could have significant implications for the future of prediction markets and online gaming regulation. A ruling in Kalshi’s favor could redefine how states interact with federally approved platforms, potentially opening the door for similar fintech-driven betting models nationwide. Conversely, a loss could reaffirm state dominance over gambling-related activities, even when federally regulated.
