Ohio regulator targets Kalshi with $5m fine
Table of contents
- The Ohio Casino Control Commission has issued a notice of intent to impose a $5 million civil penalty against Kalshi for operating without a sports gaming license in the state.
- The notice follows a March 2026 federal court ruling that Kalshi’s sports event contracts are likely subject to Ohio gambling law, though the company is appealing that decision.
- The 9th Circuit is scheduled to hear oral arguments in the Nevada case on April 16, the same week the Third Circuit ruled in Kalshi’s favor in New Jersey.
The Ohio Casino Control Commission (OCCC) has issued a formal notice of intent to impose a civil penalty of $5 million against prediction market platform Kalshi, citing the company’s continued operation of unlicensed sports gaming in the state.
The notice, announced on April 14, is the regulator’s most aggressive enforcement step yet against the New York-based platform.
The OCCC’s case
The OCCC stated that Kalshi’s refusal to stop offering sports gaming in Ohio forced it to take action to uphold state law.
According to the commission’s letter, Kalshi offers sports event contracts that allow Ohioans to place positions on the outcome of games, with a potential payout depending on the result. The OCCC considers this structure functionally identical to licensed sports betting.
The commission’s notice also states that, despite offering sports contracts to Ohio residents, Kalshi pays no Ohio state taxes on sports gaming revenues and no licensing fees. The OCCC argues this deprives the state of revenue that licensed operators are required to contribute.
Dave Yost, Attorney General of Ohio, said:
“Ohio put Kalshi on notice today that its ‘prediction markets’ are unlawful gaming and proposed a $5 million fine. A federal court already agreed with our reading of the law. I wouldn’t bet on how long Kalshi will be operating in Ohio.”
Under Ohio law, Kalshi is entitled to a hearing on the proposed penalty and has 30 days from the date of the notice to request one.
Legal background
The OCCC’s enforcement notice builds on more than a year of regulatory escalation.
In March 2025, the commission issued cease-and-desist notices to Kalshi, Robinhood, and Crypto.com, determining that their sports event contracts required a license to operate legally in Ohio.
Kalshi did not comply. The company filed a federal lawsuit against the OCCC and Attorney General Yost in October 2025, claiming the state’s enforcement actions threatened immediate and irreparable harm.
The OCCC also warned licensed sports betting operators in August 2025 that affiliating with an unlicensed sports gaming operator could put their Ohio licenses at risk, even for out-of-state activity.
A federal court in Ohio subsequently declined to grant Kalshi a preliminary injunction. US District Judge Sarah Morrison ruled in March 2026 that Kalshi’s sports event contracts are likely subject to Ohio gambling law, rejecting the company’s argument that the contracts qualify as federally regulated swaps.
Morrison found that swaps relate to financial instruments affecting commodity prices, and that the score of a basketball game does not meet that standard. The ruling did not conclusively resolve the federal preemption question, and Kalshi has said it will appeal.
A Kalshi spokesperson said:
“We respectfully disagree with the Court’s decision, which splits from a decision from a federal court in Tennessee just a few weeks ago, and will promptly seek an appeal.”
Multi-state picture
Ohio’s action is one front in a widening national dispute.
In mid-March 2026, Arizona became the first state to file criminal charges against Kalshi. Attorney General Kris Mayes filed 20 misdemeanor counts accusing the platform of operating an unlicensed gambling operation and accepting bets on state elections.
In April 2026, a federal judge temporarily blocked Arizona from enforcing those charges, after the Commodity Futures Trading Commission (CFTC) filed suit arguing federal law preempts the state’s case.
At the appellate level, the picture is mixed. On April 6, the Third Circuit Court of Appeals ruled 2-1 in Kalshi’s favor in the New Jersey case, becoming the first federal appeals court to hold that prediction market platforms may fall under exclusive federal jurisdiction.
The 9th Circuit has scheduled oral arguments for April 16 in San Francisco, covering cases brought by Nevada, Robinhood, and Crypto.com.
Nevada has obtained a state court preliminary injunction and remains the only jurisdiction with an active, court-enforced ban on Kalshi’s sports contracts.
The Financial Times reported in February 2026 that Kalshi’s sports-related contracts were generating estimated annualized revenues of approximately $1.3 billion, representing roughly 90% of the platform’s total fees.
Scale of the market
The enforcement action against Kalshi comes as Wall Street moves to quantify the sector’s long-term potential.
A Bank of America report published on April 9 estimated that annual US sports event contract volume could eventually reach $1.1 trillion, positioning prediction platforms as a structural threat to the established sports betting industry.
Analysts Julie Hoover and Shaun Kelley projected approximately $100 billion in contract volume for 2026, with long-term revenue potential of $10 billion per year at an average fee rate of around 1%.
The report noted that prediction market operators hold three structural advantages over licensed sportsbooks: national reach under federal CFTC oversight, a broader eligible user base, and the absence of state gaming taxes.
Shares of DraftKings and Flutter Entertainment fell 7.06% and 3.89% respectively on the day of publication. For licensed sports betting operators already paying state taxes and licensing fees, the outcome in Kalshi’s case carries significant competitive implications.
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About the author
Bianca Máthe
Bianca Mathe joined the iGaming industry in 2018 and has since built extensive experience across multiple verticals, working with international gaming organizations on editorial, marketing, and media strategy. She brings a strong understanding of the regulatory, commercial, and technological forces shaping the global iGaming sector.
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