The battle between Kalshi and state gaming regulators moved to Ohio this week.
Kalshi filed a lawsuit to block the Ohio Casino Control Commission and state attorney general from enforcing state gaming laws against the company’s sports prediction markets.
Kalshi is seeking a temporary restraining order to keep Ohio regulators at bay. The company received the same outcome in a legal battle against regulators in Nevada and New Jersey. Ultimately, Kalshi is seeking a permanent injunction to keep operating in the Buckeye State.
“Defendants’ actions threaten immediate and irreparable harm, not just to Kalshi but to its customers and commercial counterparts,” Kalshi’s legal team wrote in the suit. “Shutting down its event contracts in Ohio would threaten Kalshi’s viability and require devising complex technological solutions whose feasibility is entirely untested and unclear.”
The technological solutions Kalshi alludes to is the geolocation software websites use to verify where a bettor is located. Online casinos and sportsbooks use these programs to verify the customer is in the legal jurisdiction.
Kalshi’s Playbook Against Ohio Is Identical To Arguments Elsewhere
In addition to Ohio, Kalshi it litigating against four other states in some form. It’s won lawsuits against Nevada and New Jersey, is still locked in a battle with Massachusetts, but lost its suit against Maryland.
A federal judge agreed with regulators, claiming Kalshi needs a Maryland sports betting license to continue operations. Kalshi appealed the decision and awaiting results. However, Maryland agreed to let Kalshi stay open to Maryland residents while the appeal is pending.
The move came after Kalshi cited the immense time and work it would take to implement a geolocation system. Kalshi said they would be forced to shutter their entire operations while they implemented a program to keep Marylanders off the site.
As a result, Maryland regulators said they would delay the enforcement of their cease-and-desist.
States fighting Kalshi argue the firm circumvents state gaming laws. They argue sports prediction markets are simply a form of sports wagering. Kalshi’s counterargument is the Commodity Futures Trading Commission already has oversight of it at the federal level. Thus, state gaming laws don’t apply to its event contracts.
According to a report from The Columbus Dispatch, Kalshi’s Ohio lawsuit claims the company tried to reach an agreement with the state for months. State regulators told the company that federal law doesn’t trump state sports betting laws.
Additionally, the lawsuit states that regulators warned licensed sportsbooks not to do business with Kalshi. Failure to adhere to the guidance would result in action against the licensed operator.
“If effectuated, the Casino Commission’s threat to these brokers would cut off Kalshi’s access to millions of users and key operators, and compound the extraordinary harm Kalshi would suffer as a result of the Casino Commission’s unlawful attempts at regulation,” the suit reads.
Ohio Argues State Law Overrides Federal Law
Ohio regulators issued a cease-and-desist letter to Kalshi earlier this year. Then, Attorney General Dave Yost filed a brief in June supporting New Jersey’s effort in federal court against the company.
The lawsuit details a letter from state regulators clearly stating they believe Kalshi’s sports offerings violate state law.
“The Commission is unpersuaded that Ohio law is preempted by federal law as Kalshi contends,” Ohio Casino Commission executive director Matthew Schuler wrote in the letter on Oct. 6. “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.”
The lawsuit comes after Kalshi faced pushback at the federal level. Several lawmakers on both sides of the aisle submitted a draft letter to the CFTC outlining concerns about the company’s sports prediction markets.
