The Ohio Casino Control Commission is widening its prediction markets crackdown beyond the platforms themselves, warning its own sports betting and fantasy licensees that providing services to unlicensed sports event contract operators could cost them their licenses.
The OCCC sent a letter to licensees and applicants 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, Interim Executive Director Andromeda Morrison confirmed at Wednesday‘s meeting. The OCCC ordered them to “immediately cease” those activities and gave them until Oct. 30 to notify the commission they are in compliance.
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. Following that decision, 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 on Tuesday that one company has confirmed compliance, though it did not say which one. Two others, Kalshi and Polymarket as of Monday, are pursuing litigation against the commission while the rest remain in discussions with regulators.
What the letter warns licensees about
The OCCC’s letter casts a wide net. For purposes of the guidance, the commission considers all of the following to be licensees:
- Fantasy contest operators
- Sports gaming proprietors
- Management services providers
- Mobile management services providers
- Suppliers
- Key employees of proprietors, management services providers and suppliers
- Certified independent integrity monitors
- Certified independent testing laboratories
- Applicants for any of these licenses or certifications
The OCCC 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. The commission said that raises significant suitability concerns.
“As you are aware, maintaining suitability is a continuing obligation of licensure,” the OCCC said. “A licensee’s decision to provide services to, partner with or otherwise support an entity engaged in unlicensed sports gaming in Ohio reflects on the licensee’s character, integrity, honesty, and reputation.”
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, the firms that take customer orders for trades on CFTC-regulated exchanges. Those companies remain in compliance as long as they block customers in Ohio from directly or indirectly accessing sports event contracts.
Where the cease-and-desist orders stand
LSR reported that most of the operators did not pull their sports event contracts from Ohio by the deadline.
“Thus far, the Commission has had a dialogue with a number of these companies and are working with them in coming into compliance,” the OCCC told LSR on Tuesday.
The commission said many of the companies have engaged in “good faith” conversations. At Wednesday’s monthly meeting, Morrison said the commission has had “productive conversations with several of these companies.”
She said “those issues remain under investigation” and that she hopes to report more progress soon.
“I think we are all united in our belief that the commission cannot sit utterly by while watching Ohio law be violated,” Morrison said. “We are continuing to monitor and develop that situation.”
“I know the commissioners appreciate you getting us sued each week, Director,” Chairman Thomas Stickrath quipped in response.
