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Licensing & Regulation

Prediction market services now a gaming licence risk in Ohio

Key Takeaways

  • The Ohio Casino Control Commission has told every sports gaming and fantasy contest licensee and applicant to stop providing prediction market services to platforms offering sports event contracts in Ohio, and to confirm it in writing by 30 October 2026.
  • The letter alleges no unlicensed gambling by those licensees. It treats the relationship itself as a suitability question, and suitability in Ohio is a continuing condition of the licence rather than a test passed at application.
  • Arizona, Michigan, Nevada and Ohio have all warned their own licensees since 2025, Nevada by Notice to Licensees 2025-77 of 15 October 2025. No regulator outside the United States has publicly used that route, although Great Britain, Malta and Gibraltar each hold the power to.

What is the verdict?

Ohio has found the lever that works. Prediction market services are now a licence conditions problem rather than a commercial judgement, because 18 months of litigation against the platforms has produced a circuit split and no finality, so the Commission has turned to the instrument it controls outright, the continuing suitability of the licences it already granted.1

Ohio first put the warning in writing in August 2025, with no deadline attached. The letter of 20 October 2026 runs to a page, gives licensees ten days to reply, and says that “maintaining suitability is a continuing obligation of licensure” and that continued facilitation or support of illegal gambling activity “raises significant suitability concerns”.1, 2, 16

Section 3775.09(A) of the Ohio Revised Code requires suitability to be established by clear and convincing evidence, and section 3775.02(H) lets the Commission limit, suspend or revoke a licence, so a proprietor weighing an Ohio licence against a market making contract is not facing a close decision.3

What changed, and which prediction market services does Ohio’s letter cover?

The prediction market services the letter names are liquidity provision and market making, integrity monitoring, equipment, data security and other technology-related services supplied to any entity offering sports event contracts to persons in Ohio without a sports gaming licence. A footnote extends the word licensee to every fantasy contest operator, sports gaming proprietor, management services provider and applicant, which pulls in companies with no Ohio revenue yet.1

Three moves came inside three weeks. On 2 October the Governor and the Commission’s chair sent cease and desist notices to ten named companies, among them Polymarket, Robinhood, Coinbase, Underdog, Novig, ProphetX, Gemini Titan, WeBull, Plus500 and MooMoo Financial, with a compliance date of 16 October. Kalshi was absent, having been served a $5m enforcement notice in April 2026 in which the Commission said Kalshi had “effectively thwarted the Commission from investigating” its suitability.4, 5

The Sixth Circuit made the sequence possible. Its ruling of 25 September 2026 in KalshiEX LLC v. Schuler held that sports event contracts are not swaps under 7 U.S.C. section 1a(47)(A)(ii) and, failing that, that the Commodity Exchange Act would not preempt state gambling law anyway. Ohio sits in the Sixth Circuit, so it is enforcing from the position the Third Circuit denied New Jersey in April.6, 7

Futures commission merchants and introducing brokers are compliant only if customers in Ohio cannot “directly or indirectly access sports event contracts listed on Designated Contract Markets”. Indirectly reaches routing and introduction, which is wider than most brokers will have tested across their own order flow.1

Why does this matter outside Ohio?

Because the licensee route is now settled practice in four US states and nobody outside the United States has publicly tried it. Arizona, Michigan and Ohio warned their licensees during 2025, and Nevada followed on 15 October 2025 with Notice to Licensees 2025-77, Sports Event Contracts are Wagers, which told licensees that involvement with event contract platforms may “call into question the good character and integrity of the licensee”. Every jurisdiction outside the United States that has moved went at the platform instead.16, 17, 12 to 15

MarketRegulatorWhat it didRoute used
OhioCasino Control CommissionOrdered its own licensees to stop providing prediction market services and confirm by 30 October 2026Continuing suitability of the gambling licence
Great BritainGambling CommissionSaid a business taking bets on events would likely be a gambling operator needing a licenceLicensing requirement on the platform
NetherlandsKansspelautoriteitOrdered Polymarket to stop offering services, February 2026, as illegal gambling under Dutch lawEnforcement against the platform
New ZealandDepartment of Internal AffairsNotified Kalshi and Polymarket in February 2026 that their products are gambling in lawLicensing requirement on the platform
SingaporeGambling Regulatory AuthorityClassified Polymarket an unlawful operator and blocked access from 12 January 2025Access blocking
CanadaCSA and CIROConfined event contracts to CIRO-registered dealers and excluded sports and election contracts, April 2026Securities registration

The same lever sits unused in the Great Britain LCCP, in Malta’s key function regime and in Gibraltar’s section 20 power to prohibit a licence holder from using a named provider. None of those needs a court to decide what a sports event contract is, only a regulator deciding that a licensee’s commercial choices have made it less suitable, which is a judgement rather than a question of law and reviewable on narrower grounds.

What would change this verdict?

Not the CFTC’s rulemaking, which cuts the other way. The interim final rule published on 19 October 2026 excludes gambling products from the swap definition only where a state or tribal licensee offers them and they are “not traded on a board of trade, an organized exchange, a swap execution facility” or similar venue. A designated contract market is precisely such a venue, so the carve-out protects licensed sportsbooks and does nothing for the exchanges. Comments close on 18 November 2026. Any licensee looking at exchange-based or peer-to-peer wagering now has a definitional reason to pause.9, 10

Two things would change the verdict. A Supreme Court grant on New Jersey’s certiorari petition, filed on 2 September 2026, followed by a ruling for preemption, would remove the premise. Polymarket US has also sued Ohio in the Southern District of Ohio, case 2:26-cv-01502, on dormant Commerce Clause and preemption grounds, but that attacks the statutes rather than the suitability power, so even a Polymarket win leaves the 20 October letter standing.11, 8

What to do before the next letter arrives

  1. Name the person who can sign a compliance confirmation inside a ten-day window, and check whether anybody has read the footnote extending the duty to applicants. The classification and 72-hour response parts of the Regulatory Enforcement Response Playbook cover who replies and when. (https://thegamingboardroom.com/product/regulatory-enforcement-response-playbook/?utm_source=article&utm_medium=content&utm_campaign=boardroom-papers&utm_content=2026-10-29)
  2. List every contract, data feed, market making arrangement, integrity monitoring service and equipment supply the group provides to any venue listing sports event contracts, then mark those reaching customers in a state where the venue is unlicensed.
  3. Run the directly or indirectly test across your own order flow and introduction arrangements, not only direct customer relationships.
  4. Check the material change notification clock in each market where you hold a licence. Ohio allows ten days under section 3775.03(E).
  5. Record at board level, with a date against it, whether prediction market revenue is worth the suitability exposure in your largest licensed market.

Sources

1. Ohio Casino Control Commission, letter to Sports Gaming and Fantasy Contest Licensees and Applicants, 20 October 2026, text reproduced in The Event Horizon, “Ohio Escalates Prediction Markets Fight With New Warning To Gaming Licensees”, 21 October 2026.

2. Ohio Casino Control Commission public meeting, 21 October 2026, remarks of Interim Executive Director Andromeda Morrison, reported by CDC Gaming, “Ohio: Licensees providing services to prediction markets may impact suitability”.

3. Ohio Revised Code Chapter 3775, sections 3775.02(H), 3775.03(A)(1), 3775.03(E), 3775.041 and 3775.09(A).

4. Ohio Casino Control Commission and Office of Governor Mike DeWine, cease and desist notices to ten prediction market companies, dated 2 October 2026, compliance date 16 October 2026, signed by Governor DeWine and Commission chair Thomas Stickrath.

5. Ohio Casino Control Commission enforcement notice against KalshiEX LLC, $5m, announced 14 April 2026.

6. KalshiEX LLC v. Schuler and KalshiEX LLC v. Orgel, Nos. 26-3196 and 26-5235 (6th Cir., 25 September 2026).

7. KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir., 6 April 2026).

8. QCX LLC, trading as Polymarket US, v. Wilson and others, No. 2:26-cv-01502 (S.D. Ohio, filed 16 October 2026, Judge Douglas R. Cole).

9. Commodity Futures Trading Commission, Further Definition of “Swap” To Exclude Casino-Style Gambling Products, interim final rule and request for comment, RIN 3038-AF81, 91 FR 65969, published and effective 19 October 2026, comments due 18 November 2026, amending 17 CFR 1.3.

10. Commodity Futures Trading Commission, Notice of Proposed Rulemaking, Event Contracts Involving Enumerated Activities, release 9249-26, 10 June 2026, 91 FR 35806, amending Regulation 40.11 and adding Appendix F to Part 40 under Commodity Exchange Act section 5c(c)(5)(C).

11. State of New Jersey, petition for a writ of certiorari in KalshiEX LLC v. Flaherty, reported filed on 2 September 2026.

12. International Association of Gaming Regulators, “Prediction markets: global approaches to an emerging challenge”, summarising published Gambling Commission (Great Britain) commentary.

13. Kansspelautoriteit order to Polymarket to cease offering services in the Netherlands, February 2026.

14. Department of Internal Affairs (New Zealand) notifications to Kalshi and Polymarket, February 2026; Gambling Regulatory Authority of Singapore, Polymarket access block from 12 January 2025 under the Gambling Control Act 2022.

15. Canadian Securities Administrators and Canadian Investment Regulatory Organization, “Application of CIRO Requirements to Event Contracts”, April 2026.

16. Holland & Knight, “Ohio Pulls the Lever: Gaming Licensees Ordered to Cease and Desist with Prediction Markets”, 21 October 2026, recording the Commission’s March 2025 cease and desist letters to operators and its August 2025 written warning to licensees.

17. Nevada Gaming Control Board, Notice to Licensees 2025-77, “Sports Event Contracts are Wagers”, 15 October 2025, signed by Chairman Mike Dreitzer.