Kalshi Sues State Of Ohio

For most of the year, Kalshi has had smooth sailing. It’s offered “option trading” on sports, facing hardly any legal pushback because it’s legal at the federal level (or say they argue). This has led to an explosion of volume in the platform and a skyrocketing valuation for the company.

Still, you’re starting to see states push back. Hard. States, a growing number of them, believe Kalshi is acting as a sports betting app, and illegally so.

Off that belief, Ohio banned Kalshi. It wants its Ohio sports betting operators to compete in its legal sports betting market without these “unlicensed” threats, as they see it.

But… if you thought Kalshi was just going to take it on the chin and walk away, you’d be sorely mistaken. Kalshi has fired back in the prototypical American way — they sued the bastards. Keep reading and we’ll take you into this legal battle. Stick around to the get the big picture takeaway (hint: this won’t be the last lawsuit).

Kalshi Takes Ohio To Court

Kalshi has officially filed a federal lawsuit against the Ohio Casino Control Commission — and the list of defendants is no small one. Executive Director Matthew Schuler, every OCCC board member, and even Attorney General Dave Yost have all been named in the case. Kalshi is bringing an all-out blitz for its livelihood in the Buckeye State.

The issue started back in March when Ohio ordered Kalshi to stop operating in the state. Kalshi pushed back hard, arguing its markets are federally regulated commodities under the CFTC — and that states like Ohio have no jurisdiction to interfere. That argument didn’t get far. On September 25, the two sides jumped on a call to hash things out, but it didn’t end well. Regulators told Kalshi flat out they were “unpersuaded” that federal law shields the platform from state betting rules. They gave the company a hard deadline: shut down by October 20.

Kalshi wasn’t about to blink. Within days, it filed its lawsuit in the U.S. District Court for the Southern District of Ohio, asking for a preliminary injunction to stop the state from enforcing that order. Their legal team argues that Ohio’s actions violate the Supremacy Clause — the same argument Kalshi has used to fight regulators in New Jersey, Nevada, and Maryland. If the court grants the injunction, Kalshi can keep operating in Ohio until the larger constitutional question is settled.

It’s a high-stakes gamble, even by Kalshi standards. Ohio is one of the biggest sports betting markets in the country, and losing access would sting. But this case isn’t just about one state. It’s really about the national precedent that could or could not be set here.

Ohio Wants No Part Of Prediction Markets

Ohio isn’t singling out Kalshi by any means. It just so happens Kalshi is the biggest prediction market in the state, and United States at large. But they made it clear they want no prediction markets in their state. Period. And that includes from current sports betting apps it allows to operate stateside.

You see, Ohio regulators are also strong-arming these bookies. Per a complaint by Kalsi, the OCCC allegedly sent out a letter to all sports betting licensees on August 25 with a pretty blunt message: stay away from Kalshi and other prediction markets — or else.

The letter, allegedly (nothing is official yet), warned that any company doing business with prediction markets, even outside of Ohio, could face administrative action. Kalshi says the OCCC’s warning was a direct threat that’s already scaring off potential partners. Several licensed operators reached out to Kalshi after the notice, saying they were hesitant to move forward with previously discussed partnerships for fear of jeopardizing their own Ohio licenses.

Oddly enough, the OCCC sort of acknowledged they did happen to do this. They sent their own letter, saying other state gaming regulators do the same. Heck, Arizona did so in September and also targeted prediction markets.

Kalshi vs. The World

Kalshi is at war, and it’s not just in the Buckeye State. We’re counting at least five different battles in five states. Each state seems to have its own opinion on whether prediction markets should be treated as commodities or gambling, and the inconsistency is creating chaos for Kalshi’s entire business model.

In Maryland, Kalshi took one of its first major blows. A federal judge denied their request for an injunction, siding with the state’s argument that its gambling laws could still apply, even with Kalshi’s CFTC designation. That decision stung, because Kalshi had just won similar cases in Nevada and New Jersey.

Massachusetts has proven to be an even bigger headache. There, it’s not just regulators taking aim — it’s the state attorney general herself. Massachusetts filed its own lawsuit accusing Kalshi and its broker partner Robinhood of running unlicensed sports betting under the guise of “event contracts.” The complaint reads like a moral crusade, warning of public health risks, problem gambling, and financial losses.

Across these cases, Kalshi keeps falling back on the same argument: the federal Commodity Exchange Act preempts state gambling laws. They’re telling judges, in essence, that because the CFTC regulates them, states have no right to interfere. The problem is that not every court agrees.

The result is a patchwork legal battlefield — wins in some states, losses in others, and no universal rule in sight. Kalshi can still operate nationally (mostly) for now, but the longer this drags out, the more vulnerable its expansion becomes. A single bad ruling could upend their federal protection argument entirely…