Online prediction platform Kalshi has filed a federal lawsuit against the Ohio Casino Control Commission and Ohio Attorney General Dave Yost, claiming the state is wrongfully targeting its operations by misclassifying them as illegal sports betting.
In a complaint submitted to the U.S. District Court for the Southern District of Ohio on October 7, Kalshi argues that its platform, which allows users to trade on outcomes of real-world events—including sporting results—is not a traditional sportsbook and should not fall under the state’s gambling regulations. The company refers to its offerings as “event contracts”, which it describes as federally regulated financial instruments, not wagers.
Kalshi says months of dialogue with Ohio officials yielded no resolution. Instead, the state responded with escalating actions, including a cease-and-desist letter and warnings to other companies against working with Kalshi, which the platform argues is causing reputational and financial harm.
Ohio Rejects Kalshi’s Argument, Calls It Unlicensed Gambling
Ohio regulators contend that Kalshi is operating as an unlicensed sports betting service and therefore in direct violation of the state’s gambling laws. Under Ohio law, only entities with a state-issued sports gaming license may legally offer sports betting to consumers.
In an October 6 letter, Matthew Schuler, Executive Director of the Casino Control Commission, made the state’s position clear: “The Commission is unpersuaded that Ohio law is preempted by federal law as Kalshi contends. Consequently, to the extent Kalshi chooses to continue to offer unlicensed and unregulated sports gaming in the form of sporting event contracts within Ohio, Kalshi will be violating Ohio law.”
Kalshi claims the state’s actions go beyond its own jurisdiction. According to the lawsuit, the commission warned other sportsbooks that doing business with Kalshi—even outside Ohio’s borders—could jeopardize their licenses.
“If effectuated, the Casino Commission’s threat to these brokers would cut off Kalshi’s access to millions of users and key operators,” the complaint states.
A Growing Clash Between States and Prediction Markets
Kalshi’s legal challenge highlights a growing national controversy over the rise of prediction markets – platforms that enable users to buy and sell contracts on the likelihood of various outcomes, including sports scores and political events. While similar in function to gambling, these platforms argue they are financial exchanges, not sportsbooks.
With sports betting illegal in 20 U.S. states, Kalshi has found a legal niche by presenting its services as trading rather than gambling. The platform is accessible nationwide and gained tacit approval under the Trump administration.
However, state regulators and lawmakers are increasingly pushing back. In June, Ohio’s attorney general joined over three dozen other AGs in a New Jersey court brief, warning against weakening state authority to regulate online sports betting.
Injunction Sought to Prevent Shutdown
Kalshi is now asking a federal judge to block Ohio from forcing it to cease operations by October 20, arguing that state interference undermines federal protections and violates commerce laws.
As prediction markets continue to grow – Kalshi alone saw over $2.5 billion in sports contracts traded in September 2024—this case could have broad implications for how these platforms are regulated across the U.S.
Source:
“Online betting platform Kalshi sues Ohio casino regulators, attorney general to stay open”, dispatch.com, October 7, 2025
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