Ohio Threatens Prediction Market Lawsuits as Polymarket Sues First

Ohio’s prediction market crackdown is moving toward more court fights, and operators are getting there first.

Gov. Mike DeWine says the state will sue companies that keep offering sports event contracts despite orders to stop. Meanwhile, the Ohio Casino Control Commission said two companies are pursuing litigation in response to its cease-and-desist notices, with Polymarket confirmed as one of them. The regulator has not publicly identified the second litigant.

The commission sent notices to 10 companies earlier this month, giving them until Oct. 16 to confirm compliance. One company has confirmed it complied, according to a commission spokesperson, while discussions continue with others. The agency has not identified which company complied.

“The law is very clear. The court decisions have been very clear,” DeWine told reporters. “These are not self-executing. You have to actually go out and file these suits, and that’s what we are going to do.”

Ohio is demanding withdrawals, operators are challenging its authority, and a recent appeals-court ruling has strengthened the state's legal position.

Ten notices, two legal challenges

The October notices went to: 

• Coinbase

• Gemini Titan

• MooMoo

• Novig

• Plus500

• Polymarket

• Robinhood

• Webull

They target sports event contracts, including both operating markets and soliciting or accepting customer orders through brokerage businesses.

The commission argues that those activities amount to sports betting and require an Ohio license. Its letters threaten administrative, civil, nuisance or criminal action for noncompliance.

But the responses are not uniform.

Kalshi was not among the 10 recipients. Its dispute with Ohio is already in court, and the latest notices followed an appellate decision in that litigation. Treating these as 10 new orders against a group that includes Kalshi would therefore misstate the crackdown.

Polymarket challenges Ohio’s licensing system

Polymarket’s U.S. exchange, QCX, sued Ohio officials in federal court, arguing that the state’s demands violate the Ohio Constitution’s Commerce Clause and are preempted by the Commodity Exchange Act.

The constitutional argument adds another line of attack to the industry’s familiar claim that federal commodities regulation displaces state gambling law.

Polymarket argues that Ohio’s licensing framework favors businesses with a physical presence in the state. It points to requirements involving local operations, infrastructure spending and the duration of an applicant’s Ohio presence.

The company also argues that complying would fracture its national exchange. Its complaint says that, even if a license were available, it would have to operate from Ohio and serve only customers physically present in the state.

“These discriminatory, balkanizing measures violate the Constitution’s promise of open, interstate commerce,” Polymarket’s lawyers argue. Those are the company’s allegations, not the court's findings.

Polymarket is seeking preliminary and permanent injunctions, along with legal fees and other relief. The federal court’s public entries confirm that QCX LLC v. Wilson et al. was pending by Oct. 19, when summons and counsel appearances were recorded. 

Kalshi’s appellate loss changes the backdrop

The new challenges follow a significant industry setback in the Sixth Circuit Court of Appeals, which governs federal courts in Ohio, Michigan, Kentucky, and Tennessee.

On Sept. 25, a three-judge panel affirmed an Ohio district court’s refusal to grant Kalshi a preliminary injunction. In the linked Tennessee appeal, it vacated an injunction that had protected the exchange and sent the case back for further proceedings.

The panel rejected Kalshi’s effort to establish that its sports contracts qualified for the federal protection it claimed, including its argument that the contracts were swaps beyond state gambling enforcement. That ruling supplied the backdrop for Ohio’s October letters.

Kalshi asked for panel rehearing and rehearing by the full Sixth Circuit on Oct. 9. It argues that the decision conflicts with other rulings and that new Commodity Futures Trading Commission (CFTC) rulemaking warrants reconsideration. The request does not itself overturn the September decision, and no later rehearing ruling has been independently verified.

That leaves new plaintiffs such as Polymarket seeking relief against an unfavorable appellate backdrop, while also arguing about Ohio’s licensing system.

Federal rulemaking has not settled the dispute

Kalshi’s rehearing request cites the CFTC’s Oct. 9 proposal addressing the definition of swaps, alongside an interim rule concerning gambling exclusions. The company contends those developments undermine the panel’s analysis.

But proposed rulemaking is not a final rule, and submitting it to a court does not erase an existing decision.

The same tension is playing out in Kentucky, where a federal judge canceled an Oct. 9 hearing in the United States and CFTC’s case against state officials. The parties must submit supplemental briefs by Oct. 23 addressing the Sixth Circuit ruling and the effect, if any, of CFTC rulemaking before a new hearing is scheduled. That scheduling order did not decide the merits.

Ohio’s new cases therefore sit inside a broader contest over both the meaning of existing law and how much new agency action could change the analysis.

The Supreme Court route remains open

The national fight is already reaching the U.S. Supreme Court through petitions arising from other states.

New Jersey is seeking review of the Third Circuit’s pro-Kalshi decision. Supporters of that petition, including the NFL and 39 attorneys general, have urged the justices to take it alongside related Nevada petitions and settle the federal-versus-state jurisdictional question.

The court has not agreed to hear the cases. Kalshi’s response in the New Jersey matter is due Nov. 9.

For now, Ohio is not waiting for a national answer. DeWine is promising enforcement, regulators said one company has complied, and two companies are challenging the crackdown. The next development to watch is an actual enforcement filing or an order granting, or denying, protection to an operator, not simply another warning that litigation is coming.