Ohio regulator sends cease-and-desist orders to prediction markets trio 

Ohio has become the latest state to issue cease-and-desist orders to Kalshi and Robinhood as state-level pushback against sports event contracts continues at pace. 

All three have all been accused of offering illegal sports wagering by the Ohio Casino Control Commission (OCCC).

The trio of prediction platforms list multiple markets that allow users aged 18+ to trade contracts on the outcomes of certain fixtures or tournaments. 

Despite the similarities to traditional sports wagering, the burgeoning sports event contract space is regulated at federal level by the Commodity Futures Trading Commission (CFTC), rather than having to adhere to the rules of a state regulator such as the OCCC. 

However, Ohio’s regulator has suggested the products offered by Kalshi, Robinhood, and Crypto.com meet the state’s threshold for what is defined as sports gaming, which requires a licence from the authority. 

“Purchasing a contract based on which team a person thinks will win a sporting event is no different than placing a bet through a traditional sportsbook,” explained Ohio Casino Control Commission executive director Matthew Schuler.  

“The only difference is that these event contracts do not have the consumer protections required under Ohio law and are accessible to Ohioans under 21 years of age.  

“The Commission must take action to fulfill its statutory responsibilities and ensure the integrity of sports gaming in Ohio.” 

As per the OCCC’s cease-and-desist warning, each of the three companies must notify the regulator that they have complied with the order no later than April 14. 

Action taken by Ohio means the Buckeye State becomes the third US state to issue pushback against the rise of sports event contracts.

However, Ohio is the only state to date to directly mention Crypto.com, which was the first company to venture into the sports event contracts space just before Christmas, with Kalshi following soon after.

Last week, New Jersey’s Division of Gaming Enforcement (DGE) sent cease-and-desist letters to both Kalshi and Robinhood demanding they shutter operations in the state and void all contracts traded by users based in New Jersey. 

Robinhood, which has its prediction markets powered by Kalshi’s tech, has agreed to stop offering its product in the Garden State. Kalshi, however, remains live.

Just three weeks prior, the Nevada Gaming Control Board (NGCB) hit Kalshi with the same warning, reminding the company that offering contracts on sporting events and election outcomes is “unlawful in Nevada, unless and until approved as licensed gaming by the Nevada Gaming Commission.”

However, Kalshi has since issued responses to both New Jersey and Nevada in the form of lawsuits.  

Kalshi CEO Tarek Mansour took to X on March 30 to argue that prediction markets are the “antidote” to “rampant misinformation and biased journalism.”

After claiming that prediction markets are needed now more than ever, Mansour detailed his interactions with the DGE and NGCB. 

“While they are not our regulators, both states have issued cease-and-desist orders that fundamentally misunderstand prediction markets and undermine the foundation of US financial markets, which are regulated by the federal government,” he wrote.  

“We have made every effort to engage proactively with both Nevada and New Jersey and try to educate them about prediction markets, how they are regulated and how critical they are […] but our words fell on deaf ears.  

“I can’t speak to why they are taking this action but prediction markets have proven their use, so it is a shame that these authorities are still trying to censor them. We are left with no choice: sue.” 

As part of Kalshi’s legal battle with the DGE, the exchange filed for a temporary restraining order and preliminary injunction, with the motion set to be heard by District Judge Edward S Kiel tomorrow, April 2. 

This is despite the fact that Kalshi had agreed with the New Jersey regulator to extend the cease-and-desist deadline to Monday April 7. 

Meanwhile, the case with the NGCB has significantly less momentum behind it after Judge Jennifer Dorsey’s recusal, though the reasons behind her decision were not disclosed.