Ohio regulator warns licensees over services to unlicensed prediction markets

The Ohio Casino Control Commission has warned its sports betting and fantasy licensees that providing services to unlicensed sports event contract operators could cost them their licenses.

Letter orders immediate compliance

The OCCC sent a letter to licensees saying it is “deeply concerned” that some licensees “continue to facilitate, support, or otherwise provide services” to prediction markets offering sports event contracts in Ohio without a license, according to the commission. The letter was dated Oct. 20.

The OCCC ordered licensees to “immediately cease” those activities and gave them until Oct. 30 to notify the commission they are in compliance.

The commission said it is aware of reports that certain licensees are providing services to prediction markets, including liquidity provision and market making, integrity monitoring, and equipment, data security and other technology-related services.

Enforcement action and legal challenges

The OCCC sent cease-and-desist orders to 10 exchanges and brokers earlier this month, giving them until last Friday to stop offering sports event contracts in the state. The OCCC told LSR that Plus500US is the only operator to have confirmed compliance.

Kalshi and Polymarket as of Monday are pursuing litigation against the commission, according to the OCCC.

Ohio won a Sixth Circuit ruling that cleared the way for it to enforce its gambling laws against prediction markets, which are federally regulated by the Commodity Futures Trading Commission. In September, a federal appeals court in Ohio ruled that sports event contracts do not meet the legal threshold to be considered a “swap” subject to the Commodity Futures Trading Commission’s exclusive regulatory jurisdiction.

Penalties and exceptions

The commission warned that licensees who don’t comply could face reopened suitability investigations, along with possible suspension or revocation of their licenses.

The letter includes an exception for licensees that also operate as futures commission merchants or introducing brokers, as long as they block customers in Ohio from directly or indirectly accessing sports event contracts.

The OCCC regulates 13 online sportsbooks, including FanDuel and DraftKings.