Ohio has become the latest state to take regulatory action against Kalshi, Robinhood, and Crypto.com, issuing cease-and-desist orders against the three platforms for allegedly offering unlicensed sports betting. The Ohio Casino Control Commission (OCCC) determined that these companies’ event contracts constitute sports wagering, which requires proper licensure under state law.

The recent action follows similar enforcement measures taken by Nevada and New Jersey, which also demanded that Kalshi halt its event-based contracts. However, Ohio’s move marks the first time Crypto.com has been included in the crackdown.

The cease-and-desist notices require the companies to cease operations related to sports event contracts in Ohio and to provide written confirmation of compliance by April 14. According to OCCC Executive Director Matthew Schuler, quoted by The Closing Line citing the Ohio Casino Control Commission’s press release, the commission is acting to uphold the integrity of sports gaming and to ensure that these contracts do not bypass essential consumer protections.

“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,” Schuler explained. “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.”

Legal Battle Over Regulatory Authority

Kalshi, which describes itself as a federally regulated commodities exchange, has strongly opposed the regulatory actions, arguing that its event contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC). The company has already filed lawsuits against gaming regulators in Nevada and New Jersey, asserting that state-level intervention conflicts with federal oversight.

“The threatened actions in Ohio seek to undermine not just Kalshi’s contracts, but the authority granted by Congress to the Commodity Futures Trading Commission, which has safely and effectively governed commodities markets for decades,” a Kalshi spokesperson stated, according to The Block.

The lawsuits filed in Nevada and New Jersey claim that states are attempting to regulate Kalshi in ways that are preempted by federal law. Kalshi contends that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over its operations, arguing that its event-based contracts are a legitimate financial innovation rather than a form of gambling.

Kalshi’s legal battle escalated in March when Nevada’s Gaming Control Board (NGCB) and the New Jersey Division of Gaming Enforcement (DGE) issued cease-and-desist orders. Both states accused Kalshi of operating as an unlicensed sports betting provider. Kalshi responded by filing lawsuits to block the enforcement of these orders, stating that subjecting the company to state regulations undermines the uniform federal framework designed for commodities trading.

New Jersey, in particular, has raised concerns over betting on local sports events, as state law prohibits wagering on games involving New Jersey-based college teams. The cease-and-desist order was issued as Kalshi began offering prediction markets related to March Madness games held in Newark.

Broader Implications for Prediction Markets

Kalshi’s case highlights a broader debate over whether event-based contracts should be regulated as financial instruments or as gambling. While state regulators argue that these contracts resemble traditional sports bets, Kalshi maintains that its platform operates under the same principles as other federally regulated derivatives markets.

Kalshi CEO Tarek Mansour remains defiant in the face of increasing regulatory scrutiny. “Prediction markets are a critical innovation of the 21st century, and like all innovations, they are initially misunderstood. We are proud to be the company that has pioneered this technology and stand ready to defend it once again in a court of law,” Mansour stated.

The outcome of Kalshi’s legal battles in Nevada and New Jersey could set a precedent for how prediction markets are regulated nationwide. As Ohio joins the list of states challenging the company’s operations, the legal and regulatory landscape for event-based contracts remains uncertain.