Ohio Slaps Kalshi, Robinhood, and Crypto.com with Cease-and-Desist Orders

Some days after Michigan, New Jersey, and Nevada ordered Kalshi and Robinhood to cease and desist, Ohio followed suit, issuing similar orders to several event-based futures contracts platforms. While Kalshi and Robinhood challenged the orders in other states, the regulatory action in the Buckeye State shows mounting pressure against betting alternatives such as prediction markets.

OCCC Orders Prediction Markets to Cease and Desist

The Ohio Casino Control Commission (OCCC) announced that it has issued cease-and-desist orders to three companies, namely Kalshi, Robinhood, and Crypto.com. The commission emphasized the similarities between their products and sports betting, saying that their products are practically the same as wagering.

According to Matthew Schuler, executive director of the OCCC, the only thing that truly sets event-based futures contracts from traditional betting is how they are regulated. While very similar, futures contracts feature none of the safeguards that sportsbooks are required to offer. To make matters worse, the former products can be accessed by players under 21, which is the legal age for placing bets.

Since sports betting is strictly regulated in Ohio, the OCCC took steps to ensure that the three futures contracts companies in question cease taking bets from Buckeyes. As a result, Kalshi, Robinhood, and Crypto.com were ordered to cease their operations in the state by April 14.

Kalshi Lambasts the Order

Kalshi was unhappy with the order, expressing its opposition to the enforcement action. According to Kalshi officials, the cease-and-desist order does not only challenge the legality of its products but the authority of the Commodity Futures Trading Commission too.

For context, the CFTC is the body responsible for regulating futures contracts, such as those offered by the companies in question. Some have critiqued this framework since it allows futures contracts operators to circumvent the complex betting regulatory ecosystem.

In any case, Kalshi refuted the claims that its products constitute gambling, instead describing them as legal financial instruments. The platform added that prediction markets provide significant opportunities for financial tech innovation.

Kalshi reaffirmed its intention to challenge the order in court, as it did in other states.

The Future of Prediction Markets Remains Uncertain

Sports-based future markets remain one of the hot topics in the American gaming industry. Unlike the grey-area sweepstakes, however, prediction markets expect backing from the CFTC, hoping that the body would reaffirm the legality of their products.

In the meantime, traditional sportsbooks and tribal operators continue to push against prediction markets and betting alternatives as a whole, arguing that they undermine regulated gaming.

The future of the legal battle between prediction markets and state authorities could shake up the American betting sector no matter the outcome.

However, even the most influential of operators have recognized the opportunities prediction markets have to offer. Because of that, DraftKings executives recently confirmed that they are considering exploring this vertical.