Kalshi Tuesday filed a federal lawsuit against the Ohio gambling regulator and the state attorney general seeking preliminary and permanent injunctions against actions, it claims, that could negatively impact its future business relationships.
The case, filed in the the U.S. District Court for the Southern District of Ohio, claims that the Ohio Casino Control Commission (OCCC) threat to the licenses of vendors who may do business with prediction market Kalshi is potentially detrimental to that company’s business and beyond the OCCC’s purview.
The OCCC on Aug. 25 told licensed sportsbooks and vendors in Ohio that working with Kalshi – which is federally regulated by the Commodity Futures Trading Commission (CFTC) and is therefore immune from state regulation – “calls into question the reputation of the licensee and the integrity of sports gaming in Ohio.” The Michigan Gaming Control Board issued a similar warning last week, and Arizona’s Dept. of Gaming warned state-regulated sportsbooks against partnering with prediction markets in September.
Kalshi move a new approach legally
Kalshi claims it would suffer financial and reputational damage if “some of these prospective business partners” with “millions of active users” acquiesce to the OCCC.
The filing claims that the OCCC is “misusing its regulatory authority” because it is attempting to threaten sportsbooks and vendors in other states as well as in Ohio. Essentially, the OCCC appears to classify federally regulated prediction markets as illegal operators, and suggests that working with prediction markets could have the same consequences for licensees as working with black-market partners. This process, according to the suit, is meant to “directly undermine Kalshi’s business by chilling its business relations – both in and out of Ohio.”
It is unclear whether Kalshi will take the same tack in Arizona or Michigan.
Kalshi ‘s posting of sports event contracts beginning in February has drawn the ire of gambling regulators in states with legal marketplaces requiring sportsbooks to be licensed and taxed. Kalshi continues to fight cease-and-desist orders in New Jersey, Nevada, and Maryland, and the state of Massachusetts in September sued the company for running and illegal gambling operation. In addition, tribes from California and Wisconsin have filed suits against Kalshi, which they say illegally operates in Indian Country in both states.
