The Ohio Casino Control Commission (OCCC) has mandated that ten prediction market operators and brokers cease offering sports event contracts within the state. This decision follows a ruling from a federal appeals court, which determined that federal commodities law does not override Ohio's sports-gaming regulations.
The commission issued cease-and-desist orders to firms including Underdog, Gemini Titan, Coinbase, ProphetX, Novig, Robinhood Derivatives, the U.S. entity of Polymarket, Plus500US Financial Services, Moomoo Financial, and Webull Financial. These companies are required to halt their contract offerings and confirm adherence to the commission's directive by October 16.
According to the OCCC, these contracts are classified as sports gaming activities and necessitate an Ohio license, which none of the ten companies possess. OCCC Interim Executive Director Andromeda Morrison emphasized the need for action to safeguard consumers, particularly young and vulnerable individuals, and to uphold fairness and integrity in Ohio's sports gaming landscape.
The notices prohibit these companies from soliciting or accepting orders for sports event contracts from Ohio residents or from operating a designated contract market or futures commission merchant that offers such contracts to state residents.
This enforcement action is grounded in the September 25 ruling by the Sixth U.S. Circuit Court of Appeals in the case of KalshiEx LLC v. Schuler. The court upheld Ohio's refusal to grant Kalshi a preliminary injunction, affirming that the Commodity Exchange Act does not supersede Ohio's gambling laws.
Judge Julia Smith Gibbons noted, “We hold that the CEA does not expressly preempt the states’ sports-betting laws because those laws do not directly regulate DCMs but have only incidental effects on them.”
The ruling from the Sixth Circuit clarifies that sports event contracts fall under Ohio's gambling laws. Morrison stated that the commission expects these entities to immediately stop their illegal gambling operations in Ohio.
Notably, Kalshi was not included among the ten companies receiving cease-and-desist notices, likely due to ongoing litigation against the operator in Ohio. Previously, Robinhood had contended that the contracts were swaps and that federal law took precedence over Ohio's regulations.
This action by the OCCC comes in the wake of conflicting federal court decisions regarding prediction-market sports contracts. A federal judge in Illinois recently concluded that Kalshi’s contracts were likely swaps and that certain aspects of the state’s gambling laws might be preempted.
The OCCC has warned that non-compliance could result in administrative, civil, nuisance, or criminal penalties.