Kalshi sues Ohio regulator as states escalate prediction markets crackdown
Summary
Kalshi has filed suit against the Ohio Casino Control Commission and the Ohio Attorney General in the US District Court for the Southern District of Ohio, asking for a preliminary injunction to stop Ohio enforcing state gaming laws against its event contract platform. The company says it is regulated federally by the Commodity Futures Trading Commission (CFTC) and therefore state efforts to regulate it are preempted.
The case follows an Ohio cease-and-desist earlier this year and joins a wave of federal and state litigation testing whether prediction markets are financial derivatives under federal law or illegal sports betting under state law. The issue was a major topic at this week’s Global Gaming Expo, with regulators, industry lawyers and lawmakers debating preemption, consumer protection and the future of event-contract products offered by sportsbooks.
The dispute also intersects with federal concerns: a group of senators has urged the CFTC to act, the CFTC previously tried to ban sports event contracts, and political linkages — including Kalshi appointing Donald Trump Jr as a strategic adviser — have increased scrutiny amid regulator turnover at the CFTC.
Key Points
- Kalshi sued the Ohio Casino Control Commission and Ohio Attorney General, seeking an injunction to block enforcement of state gaming laws against its platform.
- Kalshi argues it is federally regulated by the CFTC and that Ohio’s actions are preempted under federal law.
- Ohio previously issued a cease-and-desist order and warned sportsbooks against offering event contract products.
- The lawsuit is one of more than a dozen cases nationally testing whether prediction markets constitute illegal sports betting or are regulated as derivatives.
- Panels at G2E highlighted the legal debate — focused on preemption, procedure and patience — and noted the long court process ahead.
- State regulators (eg. Arizona, Michigan, Pennsylvania) are actively warning or pushing federal lawmakers about prediction markets creating a backdoor to sports betting.
- Federal actors are involved: senators have written to the CFTC, the agency previously sought to curb election and sports contracts, and recent commissioner turnover complicates enforcement.
- Kalshi saw significant volume during the 2024 election cycle and has mixed results in court so far: injunctions won in some states and denied in others.
Content summary
Kalshi’s lawsuit against Ohio is a direct challenge to state enforcement actions that seek to treat prediction markets as illegal sports betting. The company asks the federal court to declare that the federal regulatory scheme for derivatives (via the CFTC) preempts state gaming laws and to enjoin Ohio from applying those laws to Kalshi.
The dispute is unfolding alongside growing state pushback: gaming regulators and attorneys general across several states have issued warnings or taken legal action, and industry discussions at G2E reflected that this will be a multi-year court fight shaping how event contracts are treated. Congressional interest and prior CFTC actions add a national regulatory layer to an already complex legal landscape.
Context and relevance
This story matters for operators, regulators, lawyers, investors and product teams in the gambling and financial-derivatives spaces. If courts broadly accept Kalshi’s federal preemption argument, prediction markets could operate nationwide outside traditional state gambling regimes — changing compliance, tax, and consumer-protection obligations for sportsbooks and new product entrants.
Conversely, a ruling in favour of state regulators would reinforce state control over sports betting products and potentially limit the expansion of event-contract offerings. The case also signals how quickly regulators, state attorneys general and Congress are engaging with the issue, so stakeholders should track legal and policy developments closely.
Why should I read this?
Because this court fight could rewrite the rulebook for how prediction markets and sports-event contracts operate in the US. If you work in gaming, compliance, legal, or product development — or you care where sports betting is legal and how it’s regulated — this is the headline to watch. We’ve cut through the noise so you don’t have to sit through a dozen legal filings: it’s federal preemption vs state control, and the outcome will matter to market access and consumer safeguards.
Source
Source: https://igamingbusiness.com/legal-compliance/kalshi-ohio-prediction-markets-lawsuit-october/