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Regulators in Ohio have raised alarms for licensed sportsbooks regarding the potential consequences of engaging in prediction markets related to sports events.
In a letter dated August 25, the Ohio Casino Control Commission (OCCC) made it clear that any involvement in these markets without the necessary approvals could put their licenses at risk. It went on to stress that offering or facilitating these markets without proper vetting would be treated as a significant regulatory breach.
This warning arrives as various sportsbooks and daily fantasy sports operators begin to explore opportunities similar to those offered by Kalshi, with some even taking steps to register with the National Futures Association (NFA).
Ohio Not Excusing Partnerships
In the Monday letter, the OCCC also made it clear that partnerships and acquisitions won’t exempt companies from regulatory scrutiny. Last week, FanDuel and the CME Group signed a deal that will allow the sports betting operator to swiftly introduce event contracts regulated by the Commodity Futures Trading Commission (CFTC). Ohio has clarified that such collaborations won’t be accepted.
It reads, in part: “If an Ohio sports gaming licensee chooses to offer sporting event contracts in Ohio through their own DCM or FCM (or those under common ownership or operated by a related entity), or decides to associate, coordinate, or otherwise partner directly or indirectly with entities offering or facilitating the offering of sporting event contracts in Ohio, the Commission will consider these choices as it evaluates the continued suitability of a sports gaming licensee, including key employee licensees, to maintain a license.”
This is not the regulator’s first action against sports event contracts. Earlier this year, it was one of the state regulators that issued a cease and desist order against Kalshi to halt its offering of sports contracts in Ohio. But unlike in other states, this action did not escalate into a lawsuit, and Kalshi remains operational in Ohio while it faces legal challenges with three other state regulators.
The letter further warns that any operator who offers these contracts in Ohio will have this considered when evaluating their suitability for holding a license in the state.
Excluding Only Ohioans Not Enough, Says OCCC
The OCCC also clarified that merely using geofencing to block Ohio residents from accessing certain offerings may not address suitability issues.
“Furthermore, even if a sports-gaming licensee in Ohio geofences or takes other actions to restrict Ohioans from accessing sporting event contracts in the prediction markets that are otherwise offered to their patrons outside Ohio, this may not alleviate the suitability concern if the licensee associates, coordinates or partners with a company offering or facilitating the offering of these licensee (including in related entities or those under common ownership) with any entiti(ies) offering or facilitating the offering of unlicensed sports gaming in Ohio calls into question the reputation of the licensee and the integrity of sports gaming in Ohio. The commission will consider a licensee’s choices to associate with a company operating illegally in this state and may take administrative action against any licensee that does.”
This means if a company like CME decides to launch sports-related contracts in Ohio independently of its partnership with FanDuel, this decision could endanger FanDuel’s standing as a licensed bookmaker in the state.
While the letter doesn’t explicitly mention daily fantasy sports operators, experts believe that the Monday warning also applies to DFS licensees in the state.
Source: SBCAmericas
