State Regulators Take Aim at Kalshi, Robinhood, Crypto.com
Ohio has issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com, accusing the companies of operating illegal sports betting platforms under the guise of event-based prediction markets. According to the Ohio Casino Control Commission, these contracts function like traditional sports bets — but without the consumer protections and age restrictions required by law.
This follows similar actions in New Jersey and Nevada, making Ohio the fourth state to challenge the legality of these offerings. Kalshi, in particular, argues that its markets are federally regulated by the Commodity Futures Trading Commission (CFTC) and do not fall under state gambling laws.
Legal Gray Area or Federal Innovation?
The battle reflects a growing regulatory tension between traditional state-run sports betting frameworks and emerging fintech models. Prediction markets have been used for years to wager on elections, inflation, and other macroeconomic data, but sports are more culturally sensitive and commercially valuable — making them regulatory lightning rods.
Kalshi is fighting back with lawsuits, calling the state actions a mischaracterization of its product and a threat to financial innovation. Meanwhile, regulators are concerned about underage users, lack of transparency, and potential threats to sports integrity.
A Neutral Perspective: Innovation Meets Resistance
This case is less about gambling and more about how far financial innovation can push into cultural territories like sports. While Kalshi may be pioneering a new form of speculative trading, the platform must meet the same standards for fairness, transparency, and consumer protection that define both financial markets and regulated betting. Whether courts or the CFTC step in, a new regulatory framework is clearly needed.
Personal Insight
Prediction markets are blurring the line between Wall Street and the sportsbook — and regulators aren’t ready. There’s a fine balance between allowing financial innovation and ensuring public protections. If handled properly, platforms like Kalshi could unlock a new vertical in fintech. But if left unchecked, they risk becoming a loophole for unregulated gambling with all the societal risks that entails.
