Kalshi Takes Legal Action Against Ohio Over Ban on Prediction Markets

Prediction platform Kalshi has filed a federal lawsuit against the Ohio Casino Control Commission and the Attorney General’s Office, arguing that the state exceeded its authority by attempting to block its operations. The filing marks the latest chapter in the growing tension between prediction market operators and U.S. state regulators over how such platforms should be classified and governed.

Good to Know

• Kalshi filed its complaint in the U.S. District Court for the Southern District of Ohio.
• The company seeks a federal injunction to resume operations in Ohio starting October 20.
• Ohio regulators issued a cease-and-desist order in April warning licensed sportsbooks to avoid dealings with Kalshi.

Kalshi’s lawsuit, submitted in Columbus, claims that Ohio regulators acted beyond their legal boundaries by treating the platform as a gambling operation. The company, which operates federally under the Commodity Futures Trading Commission (CFTC), insists its markets fall under financial derivatives rules rather than state-level gambling laws.

According to the complaint, Kalshi had been in ongoing discussions with Ohio officials to clarify its regulatory position before the Commission issued a cease-and-desist order earlier this year. The order also warned licensed sportsbooks that engaging with Kalshi, whether in or outside state borders, could result in penalties.

The lawsuit highlights the potential damage from the Commission’s actions, stating:

“If effectuated, the Casino Commission’s threat to these brokers would cut off Kalshi’s access to millions of users and key operators, and compound the extraordinary harm Kalshi would suffer as a result of the Casino Commission’s unlawful attempts at regulation.”

Ohio’s gaming rules allow only licensed entities to offer sports betting or similar wagering activities. Regulators have argued that Kalshi’s political and event-based markets function too closely to unregulated betting, putting them in violation of state law.

However, Kalshi maintains that its markets are CFTC-approved event contracts, making them financial instruments rather than gambling products. The company’s request for a federal injunction seeks to protect its right to operate in Ohio without interference from state-level gaming authorities. If granted, the injunction would allow Kalshi to resume operations on October 20.

Ohio’s case is not an isolated one. Kalshi has received similar notices from New Jersey, Illinois, and Nevada, as more states wrestle with how to regulate prediction markets that blur the line between finance and wagering.