Ohio Regulators Urge Action Against Unlicensed Prediction Markets

Ohio Regulators Urge Action Against Unlicensed Prediction Markets

Ohio's casino regulator has warned its sports gaming and fantasy contest licensees and applicants to stop doing business with companies that offer sports event contracts in the state without a license, according to a letter obtained by The Event Horizon, a prediction markets newsletter.

The Ohio Casino Control Commission sent the letter Tuesday, Oct. 20. In it, the commission said it is "deeply concerned by reports" that some licensees continue to support unlicensed event-contract operators through services including liquidity provision and market making, integrity monitoring, and equipment, data security and other technology services.

Supporting illegal gambling activity or affiliating with illegal operators “raises significant suitability concerns,” the commission wrote, noting that maintaining suitability is a continuing condition of a license. It said such conduct reflects on a licensee's “character, integrity, honesty, and reputation” and undermines public confidence in the state's regulated markets.

The commission said it expects any licensee providing such services "to immediately cease such activities" and gave licensees until Oct. 30 to notify it of their compliance. The Event Horizon reported that the letter threatens to reopen suitability investigations and potentially suspend or revoke the licenses of companies that do not comply.

The guidance reaches well beyond operators. A footnote defines licensees to include all fantasy contest operators; the sports gaming proprietors, management services providers and mobile management services providers behind Ohio's licensed US sportsbooks; suppliers and their key employees; certified independent integrity monitors and testing laboratories; and applicants for any of those licenses. Futures commission merchants and introducing brokers that do not let Ohio customers access sports event contracts listed on designated contract markets will be considered in compliance, the letter says.

Ohio's Fight Widens

The letter follows cease-and-desist orders the commission sent Oct. 2 to 10 prediction market operators and brokers, including Polymarket's U.S. entity, Robinhood and Coinbase, after the 6th U.S. Circuit Court of Appeals ruled Sept. 25 in KalshiEx LLC v. Schuler. Gov. Mike DeWine has called sports event contracts illegal gambling and argued the platforms are trying to avoid the licensing and tax rules that apply to regulated online sportsbooks.

Polymarket US has pushed back in court. On Oct. 16, the deadline Ohio set for compliance, the exchange sued the state's attorney general and casino regulators in federal court, arguing that Ohio's sports gaming licensing rules discriminate against out-of-state businesses and cannot be enforced against a federally regulated exchange.