Polymarket US filed a federal lawsuit in Ohio on October 16, 2026, seeking to block state cease-and-desist orders against its sports event contracts. Following a September 25 Sixth Circuit ruling against rival Kalshi, the Ohio Casino Control Commission issued enforcement demands to 10 prediction markets on October 2. Polymarket argues that fresh October 9 CFTC rules and the Dormant Commerce Clause place its operations strictly under exclusive federal jurisdiction.
Polymarket's federal lawsuit against Ohio
- ▪Polymarket US argues under the Dormant Commerce Clause that Ohio's licensing rules unconstitutionally favor in-state physical footprints and restrict market operations to Ohio residents
- ▪Polymarket US, operating through CFTC-registered QCX LLC, filed a federal lawsuit in the U.S. District Court for the Southern District of Ohio on October 16, 2026, against Interim Attorney General Andy Wilson and the Ohio Casino Control Commission
- ▪Polymarket US asserts that the Commodity Exchange Act grants the CFTC exclusive regulatory jurisdiction over event contracts listed on federally designated exchanges
- ▪Polymarket US seeks declaratory relief stating Ohio's gambling laws are unconstitutional and preempted, alongside preliminary and permanent injunctions against Ohio officials
Ohio's enforcement against prediction market operators
- ▪On October 2, 2026, the Ohio Casino Control Commission sent cease-and-desist letters to 10 prediction market operators demanding they halt unlicensed sports event contracts and provide written compliance confirmation by October 16, 2026
- ▪As of October 21, 2026, an Ohio Casino Control Commission spokesperson stated that one notified prediction market operator confirmed compliance while two operators filed lawsuits against the state
- ▪The Ohio Casino Control Commission warned prediction market operators that non-compliance could result in civil financial penalties equaling Ohio-generated revenue, as well as state criminal penalties for unlicensed bookmaking
Impact of CFTC regulatory actions
- ▪On October 9, 2026, the CFTC issued an interim final rule excluding casino-style gambling from the federal definition of swap while publishing a proposed rule explicitly incorporating event contracts
- ▪Polymarket US argues in its complaint that the CFTC's October 9, 2026 regulatory actions—an interim final rule and a proposed rule—altered the legal landscape established by the Sixth Circuit's September 25 ruling against Kalshi
Appellate court rulings on prediction markets
- ▪On September 25, 2026, the U.S. Court of Appeals for the Sixth Circuit ruled in KalshiEx LLC v. Schuler that sports event contracts are not swaps under federal law and that the Commodity Exchange Act does not preempt Ohio sports gaming laws
- ▪The U.S. Court of Appeals for the Third Circuit ruled in favor of Kalshi against New Jersey on federal preemption, prompting New Jersey to petition the U.S. Supreme Court for review
Broader consequences for prediction market platforms
- ▪Prediction market operators rely on single CFTC registration to maintain nationwide liquidity, but risk facing individual state licensing regimes and local legal costs if states successfully enforce local gambling laws
- ▪If Ohio successfully enforces its cease-and-desist orders, state gaming regulators nationwide could replicate the Sixth Circuit's legal template to target prediction market platforms
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