Kalshi has sued the Ohio Casino Control Commission in state court, opening a new legal front in its fight against Ohio gambling regulators after the state moved to fine the prediction market exchange $5 million over its sports event contracts.
The complaint, filed June 29 in Franklin County Court of Common Pleas, seeks to block an Ohio administrative proceeding accusing Kalshi of offering unlicensed sports gaming in the state. Ohio regulators served Kalshi with a notice in April alleging that the company had operated or conducted sports gaming in Ohio without a license since approximately January 2025 and seeking a $5 million monetary fine or civil penalty.
Kalshi’s new lawsuit does not just rehash the broader federal preemption fight over whether states can apply gambling laws to federally regulated event contracts. Instead, it targets the process Ohio is using to pursue the fine, arguing that the Commission cannot seek a punitive civil penalty through an administrative proceeding that does not provide a jury trial.
“We have sued the Ohio Casino Control Commission for seeking to fine Kalshi $5 million without the jury trial guaranteed by the Ohio Constitution,” Josh Sterling, a Milbank attorney representing Kalshi, said in a LinkedIn post sharing the complaint. “As always, Milbank LLP appreciates the opportunity to be heard by the court.”
The Ohio Casino Control Commission did not immediately respond to a request for comment. DeFi Rate will update this story if the Commission responds.
Ohio fine sparks new Kalshi lawsuit
The penalty stems from Ohio’s position that Kalshi’s sports event contracts amount to unlicensed sports gaming under state law.
Kalshi says the Commission’s notice cited its authority under Ohio sports gaming law but “does not explain how it arrived at this $5,000,000 figure.” The company is asking the state court to halt the administrative penalty proceeding and rule that Ohio cannot impose the fine through that process.
The new suit comes as Kalshi and Ohio are already fighting in federal court over whether the Commodity Exchange Act preempts state gambling laws as applied to federally regulated sports event contracts. A Southern District of Ohio judge denied Kalshi’s request for a preliminary injunction in March, and the Commodity Futures Trading Commission later filed a Sixth Circuit amicus brief supporting its exclusive jurisdiction over prediction markets.
Kalshi challenges no-jury penalty process
Kalshi’s core argument in the new state-court case is that Ohio is trying to impose a punitive civil penalty through an administrative process that does not provide the jury trial protections guaranteed by the Ohio Constitution.
Article I, Section 5 of the Ohio Constitution says “the right of trial by jury shall be inviolate,” meaning the right must be protected and cannot be taken away. Kalshi argues that protection applies here because Ohio is not seeking compensation for specific harm, but a $5 million civil penalty designed to punish or deter alleged misconduct.
The complaint leans heavily on the U.S. Supreme Court’s 2024 decision in SEC v. Jarkesy. In that case, the Court held that when the SEC seeks civil penalties for securities fraud, the Seventh Amendment entitles the defendant to a jury trial. Kalshi says Ohio courts apply a similar framework under the state constitution’s jury-trial guarantee.
Kalshi argues the proposed fine is a legal remedy in the constitutional sense, meaning the type of monetary penalty that historically had to be pursued in court before a jury. The complaint says civil penalties “designed to punish or deter the wrongdoer rather than solely to restore the status quo” fall into that category, quoting Jarkesy. In Kalshi’s view, Ohio cannot avoid the jury-trial requirement by routing the case through an agency-run hearing instead of court.
Kalshi also raises a separation-of-powers argument. The complaint says Ohio law gives the Commission too much discretion to choose an administrative forum and impose statutory penalties without a clear “intelligible principle” from the legislature. Kalshi says Ohio’s sports gaming law does not set a clear penalty range, formula for calculating fines or maximum penalty, leaving the Commission with what the complaint describes as “unbounded power to set statutory penalties.”
Penalty fight adds to state enforcement battle
The Ohio penalty case adds another layer to the expanding legal fight over whether state gambling regulators can police sports event contracts offered on federally regulated prediction market exchanges.
Kalshi’s complaint points to pending appeals in the Sixth Circuit involving Ohio and Tennessee. The company says they are scheduled for argument July 30. Those cases are expected to address the broader question of whether state gaming laws are preempted when applied to event contracts listed by CFTC-regulated exchanges.
The new Ohio lawsuit raises a narrower but potentially important question of whether a state regulator can impose a multimillion-dollar penalty through a no-jury agency process, even as courts weigh whether state sports gaming laws apply to federally regulated prediction markets at all.
The Ohio suit adds another front to the legal fight over state power in prediction markets. States are trying to regulate, tax and fine sports event contracts, while platforms and the CFTC argue those efforts conflict with federal oversight of CFTC-regulated exchanges.
