Ohio regulators have moved to impose a $5 million penalty on prediction market operator Kalshi, escalating a dispute over whether the company’s sports event contracts amount to unlicensed sports betting.

Ohio Targets Sports Contracts and Licensing Status

The Ohio Casino Control Commission said it has sent a notice of intent to fine KalshiEX LLC, arguing the platform has offered products that fall under Ohio gaming law without securing a state licence. The action marks one of the most aggressive enforcement steps yet taken by a state regulator against a prediction market company.

According to the commission, Kalshi’s sports contracts effectively function as wagers on sporting outcomes. Regulators said those products place the company within the same framework that governs licensed sportsbooks operating in Ohio.

“The Commission takes its regulatory responsibilities to ensure compliance with the law and the integrity of sports gaming in Ohio seriously,” the Commission’s statement read.

The notice, signed by OCCC Executive Director Matthew Schuler, was delivered to Kalshi’s legal team on April 14. Regulators said Kalshi has operated in the state since January 2025 without a licence issued by the commission.

Ohio also alleged that Kalshi accepted customers between ages 18 and 20, a group barred from legal sports betting under state law. The filing said roughly 35,000 users are tied to the platform in Ohio, though the sources did not specify how many were in that age bracket.

The commission further criticized Kalshi’s self-exclusion system, saying it does not match Ohio’s required Time Out Ohio program used by licensed operators. That program allows users to exclude themselves from gambling venues and platforms for terms ranging from one year to a lifetime.

“By continuing to operate without seeking licensure, Kalshi has effectively thwarted the Commission from investigating Kalshi’s (and its key employees’) suitability,” read the notice. “As a result, the Commission also lacks awareness of whether, or to what extent, Kalshi adheres to the various safeguards and guardrails that Ohio law requires.”

Kalshi recently became the first partner of IC360’s nationwide prediction market exclusion tool, according to one of the supplied reports.

Court Loss Strengthened Ohio Position

The latest enforcement action follows a March court ruling that favored Ohio. Federal Judge Sarah Morrison rejected Kalshi’s request for an injunction that would have blocked the state regulator from acting against the company.

That ruling allowed Ohio to continue asserting authority over Kalshi while litigation proceeds. Judge Morrison reportedly cited a duty to “avoid absurdity” when denying the request.

Kalshi had argued that federal oversight through the Commodity Futures Trading Commission preempts state regulation. The company has consistently said its markets are federally authorized event contracts rather than gambling products.

The broader debate has become central to the rapid expansion of prediction markets. Platforms such as Kalshi offer contracts tied to sports, politics, finance, weather and entertainment outcomes. State gambling agencies in several jurisdictions have challenged those offerings when they resemble traditional wagering.

Ohio Attorney General Signals More Pressure

Ohio Attorney General Dave Yost added pressure after the announcement, posting publicly that he “wouldn’t bet” on Kalshi remaining active in the state.

That comment fueled speculation that Ohio could seek stronger remedies if Kalshi continues offering contracts there.

The company has not publicly indicated plans to leave Ohio.

Kalshi’s growth has made the conflict more visible. One supplied report cited estimates that the company generated $1.3 billion in annualized revenue from sports contracts, with about 90% of estimated revenues tied to sports-related trading. Another report said its monthly user base rose 8.5 times to 5.1 million users from the start of 2025 through mid-February.

Ohio is not the only state confronting Kalshi. The platform recently faced criminal charges in Arizona over alleged unlicensed sports and political markets. However, a federal court later granted a temporary restraining order, at the request of the CFTC, preventing Arizona from pursuing those charges for now.

If Ohio confirms the $5 million sanction, it would be the first known state gambling regulator fine issued against Kalshi. The company can request a hearing to challenge the proposed penalty.

The case now stands as another test of where state gambling laws end and federal commodities oversight begins, with that question carrying implications far beyond Ohio.