Kalshi Sues Ohio Regulator to Block Ban on Sports Event Contracts
Kalshi, the federally regulated prediction markets exchange, has filed a lawsuit against the Ohio Casino Control Commission (OCCC) and State Attorney General Dave Yost. The lawsuit, filed in the U.S. District Court for the Southern District of Ohio, argues that state regulators are “overstepping their authority” by interfering with the federal government’s exclusive jurisdiction over derivatives trading.
The legal action seeks emergency and permanent injunctions to prevent the OCCC from enforcing a cease-and-desist order that demands Kalshi remove its sporting event contracts from the Ohio market by October 20, 2025. This lawsuit is Kalshi’s fourth against a state gaming commission, following similar actions in Nevada, New Jersey, and Maryland.
Defense of Federal Preemption
Kalshi’s argument rests on the principle of federal preemption. The exchange maintains that as a Designated Contract Market (DCM), it operates under the Commodity Exchange Act (CEA) and the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). Therefore, the state of Ohio is legally barred from regulating Kalshi’s activities.
The OCCC explicitly rejected this defense on October 6, stating it was “unpersuaded that Ohio law is preempted by federal law” and threatening Kalshi with “administrative, civil, or criminal penalties” if it continued to offer “unlicensed and unregulated sports gaming.”
Kalshi argues that submitting to the OCCC’s demands could jeopardize its status as a CFTC-approved exchange, exposing the firm to a “Hobson’s choice” that causes “immediate and irreparable harm.”
Challenging Indirect Regulation Through Business Partners
A significant part of Kalshi’s lawsuit targets the OCCC’s actions toward its commercial partners. In addition to the direct cease-and-desist order, the OCCC sent letters to Ohio-licensed sports betting operators. These letters warned that partnering with Kalshi, even outside the state, could negatively impact the operators’ suitability for maintaining their Ohio licenses.
Kalshi argues that these threats constitute an unlawful attempt to regulate the exchange through intermediaries. The lawsuit explicitly states that a government official “cannot do indirectly what she is barred from doing directly.”Kalshi asserts that the threat of license revocation to key brokerage partners would “cut off Kalshi’s access to millions of users” and cause “extraordinary harm” to its business viability.
Kalshi is seeking both preliminary and permanent injunctions to stop the OCCC from enforcing its cease-and-desist order and, crucially, from threatening Kalshi’s business partners with the loss of their gaming licenses in Ohio due to their cooperation with the exchange.
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