Ohio gaming regulators have handed Kalshi a $5 million fine for violating state gaming laws, ramping up the war between states and prediction market firms.
The Ohio Casino Control Commission (OCCC) slapped the company with the financial penalty on Tuesday after arguing the company offers illegal sports betting in the Buckeye State. The commission levied the fine because Kalshi didn’t stop offering sports event contracts in Ohio. The OCCC ordered Kalshi to cease offering those markets in the Buckeye State.
“The commission takes its regulatory responsibilities to ensure compliance with the law and the integrity of sports gaming in Ohio seriously,” the commission said.
Legal Battle Continues
The fine comes after Kalshi secured a key legal victory earlier this month. A federal appeals court ruled that the Commodity Futures Trading Commission should regulate prediction markets, not state gambling regulators.
However, a federal judge in Ohio also ruled this month that Kalshi and similar platforms must follow state gaming laws. The platforms have argued their offerings are different from traditional sports betting. Kalshi officials referenced some of the recent court rulings in its response to the OCCC fine and is considering the company’s legal options.
“We are disappointed in this latest development, especially considering our ongoing litigation with Ohio and recent rulings in other courts confirming our right to operate as a federally licensed exchange,” a company representative told the Columbus Dispatch.
“We are reviewing the gaming commission’s letter.”
A Hefty Fine By Any Measure
Ohio regulators imposed one of the heftier amounts ever seen in the gambling world. By comparison, Nevada regulators fined Steve Wynn $10 million as part of a settlement following sexual assault allegations in 2023. Then, they fined Wynn Resorts $20 million for the scandal.
Last year, Resorts World Las Vegas was ordered to pay $10.5 million for not following anti-money laundering procedures and allowing illegal bookies to gamble large sums of money. MGM Resorts also agreed to an $8.5 million fine and Caesars Entertainment paid out $7.8 million over similar issues.
Kalshi Sues Montana Attorney General
In other prediction market news, Kalshi has filed a federal lawsuit against Montana Attorney General Austin Knudsen to prevent the state from enforcing state gambling laws against the company.
“Because traders do not take a position against the exchange itself, traders’ ability to hedge risk requires counterparties willing to assume risk in the hope of seeing a return,” company attorneys wrote in the lawsuit.
The move follows the state attempting to crack down on the industry over the last year. Regulators in the state argued the companies are providing illegal sports betting “because participants risk money or other things of value for a gain that is contingent in whole or in part upon lot, chance, or the operation of a gambling enterprise.”
