Ohio joins states cracking down on prediction market operators
State Gaming Commission Orders Licensing for Kalshi, Robinhood, and Crypto.com to Offer Sports Contracts
The dynamics of the gambling industry are increasingly influenced by regulatory changes, particularly as states clamor to ensure appropriate oversight in the rapidly evolving landscape of sports betting. After recent actions by Nevada and New Jersey to issue cease-and-desist letters to prediction market operators, the Ohio Casino Control Commission (OCCC) followed suit on March 31st, targeting platforms such as Kalshi, Robinhood, and Crypto.com, which allow users to engage in sports contract trading.
In a detailed press release, OCCC Executive Director Matthew Schuler articulated the commission’s stance, asserting that the services offered by these companies closely resemble traditional sports betting.
“Purchasing a contract predicting the outcome of a sporting event is fundamentally similar to placing a bet at a conventional sportsbook,” Schuler stated. “The distinguishing factor lies in the absence of the consumer protections mandated by Ohio law and the fact that these event contracts are accessible to individuals under 21 years of age. To uphold the integrity of sports gaming in Ohio, the Commission must take decisive action.”
Understanding the Definition of Sports Gaming
The OCCC further elaborated that the event contracts presented by Kalshi, Robinhood, and Crypto.com meet the legal definition of sports gaming, which necessitates licensure to operate within Ohio. Consequently, the commission mandated that these companies cease offering sports event contracts to Ohio residents.
Kalshi, Robinhood, and Crypto.com are primarily regulated at the federal level by the Commodity Futures Trading Commission (CFTC). However, with states like Ohio, Nevada, New Jersey, and Massachusetts starting to focus on this sector, there is a clear shift towards stricter state-specific regulations amidst the rise of wagering options for major sports events, including the Super Bowl and March Madness.
In response to the regulatory pressure from Nevada and New Jersey, Kalshi has initiated legal action by filing for declaratory and injunctive relief, signaling a potentially contentious battle between state regulators and federal oversight.
For those within the gambling industry, this development marks a crucial juncture, as it highlights the necessity for compliance with varying state regulations and the potential ramifications of operating without proper licensure. Moving forward, companies engaged in the sports gaming arena must navigate this complex regulatory environment to sustain their operations effectively.
Casino Reports is an independent publication committed to delivering comprehensive coverage of the regulated U.S. online casino and iGaming industry, providing news, features, and insightful reporting on business developments, legislation, and regulatory matters.
