Ohio Governor Mike DeWine said the state will enforce its gambling laws against Kalshi’s sports-related event contracts, describing the activity as illegal gambling rather than a lawful prediction market product. His comments came after a federal appeals court declined to stop Ohio regulators from acting against the company.

The dispute centers on whether Kalshi’s sports contracts are federally regulated financial instruments or, as Ohio argues, unlicensed sports betting subject to state law. The latest court ruling did not resolve that broader question on the merits, but it did allow Ohio’s enforcement effort to continue.

DeWine says Kalshi must follow Ohio betting rules

According to Ideastream, Ohio’s public broadcaster, DeWine said on October 2 that Kalshi was attempting to avoid the state’s sports-betting framework by presenting its offering as a prediction market. He said the company should be held to the same standards that apply to other operators in the state.

Ohio’s position is that contracts tied to sports outcomes cannot be offered outside the state’s licensed gambling system. On that view, a platform cannot escape sports-betting requirements simply by structuring the product as an event contract marketplace.

Appeals court declines to block state enforcement

The immediate trigger for DeWine’s remarks was a September 25 decision from the 6th U.S. Circuit Court of Appeals. The court upheld a lower court ruling that had denied Kalshi’s request for a preliminary injunction against Ohio’s enforcement action.

In its decision, the appeals court said Kalshi had not sufficiently shown that its sports event contracts fall within the exclusive jurisdiction of the Commodity Futures Trading Commission. The court also said federal law does not preempt the application of Ohio’s gambling laws in this dispute.

How the conflict with regulators developed

Kalshi operates a trading platform where users buy and sell contracts based on the outcome of specific events, including elections, weather developments and economic indicators. Tensions with state regulators grew after the company added sports-related contracts last year.

The Ohio Casino Control Commission concluded that those offerings amounted to unlicensed sports betting. Regulators instructed Kalshi to either stop offering the contracts in the state or obtain a license and comply with Ohio’s gambling rules, including related tax obligations.

Separate penalty threat and Kalshi’s response

Ohio’s pressure on the company has gone beyond a cease-and-desist posture. In April, the Ohio Casino Control Commission sent Kalshi advance notice that it intended to impose a $5 million penalty for allegedly operating unlicensed sports betting.

Kalshi has challenged the state’s actions in court. The company argues that its sports prediction contracts are not wagers under Ohio law and should instead be treated as federally regulated financial products. After the appellate ruling, a company spokesperson said the business would be difficult to run if rules vary from one state to another and argued that nationwide, consistent federal regulation is needed.

What comes next

For now, the confirmed next step is continued state enforcement unless Kalshi changes its offering or secures the approvals Ohio says are required. The appellate ruling leaves Ohio free to keep applying its gambling laws while the broader legal fight over how sports event contracts should be classified continues.

That leaves the central issue unresolved in a practical sense: whether sports-related prediction contracts should be treated primarily as CFTC-regulated products or as state-regulated betting. In Ohio, at least for now, regulators and the governor are treating them as the latter.

Source: en.bloomingbit.io