Polymarket US has filed a federal lawsuit challenging Ohio’s enforcement of sports betting laws against prediction market operators, arguing that the state’s licensing requirements violate constitutional protections for interstate commerce.
The complaint, filed on October 16, seeks preliminary and permanent injunctions preventing Ohio officials from taking enforcement action against the federally regulated platform.
Polymarket argues that the Ohio Casino Control Commission’s (OCCC) restrictions conflict with the Commodity Exchange Act (CEA), which places certain derivatives markets under the authority of the Commodity Futures Trading Commission (CFTC).
The lawsuit follows cease-and-desist notices issued to ten prediction market businesses earlier this month. Ohio regulators maintain that sports event contracts constitute sports gaming and therefore require a state licence.
Ohio Attorney General Andy Wilson and OCCC Executive Director Andromeda Morrison are among the defendants named in the case.
Polymarket Disputes Ohio’s Licensing Framework
Polymarket’s legal challenge focuses on Ohio’s requirement that licensed sports betting operators maintain physical infrastructure within the state.
The rules require sportsbooks to operate servers in Ohio and restrict their services to customers physically located there.
Polymarket contends that applying these requirements to its nationwide exchange would interfere with interstate commerce.
The company argues that Ohio’s regulations discriminate against businesses operating outside the state and are therefore incompatible with the Constitution’s Commerce Clause.
Its complaint states:
“Ohio’s threatened enforcement through its protectionist licensing regime violates the U.S. Constitution’s Commerce Clause and is preempted by the Commodity Exchange Act (CEA),”
The company also maintains that the CFTC has exclusive regulatory authority over event contracts traded on registered exchanges.
However, gaming attorney Joshua Kirschner, a partner at Holland & Knight, questioned Polymarket’s characterisation of Ohio’s licensing system.
“This argument that the OCCC’s regime is merely for protectionist purposes and therefore illegal on its own seems to miss the point on a few counts,” Kirschner said.
He suggested that the central legal question concerns whether an intrastate sports betting framework can apply to activities regulated under federal commodities law.
The federal Wire Act may also become relevant, as it restricts the interstate transmission of sports wagers. Ohio could argue that its requirements for local infrastructure serve legitimate regulatory purposes.
Ohio Prepares Enforcement Against Non-Compliant Operators
The OCCC sent cease-and-desist notices on October 2 to Polymarket and nine other companies involved in sports event contracts.
The recipients included Robinhood, Coinbase, Underdog, Novig, Prophet X, Gemini Titan, Plus500, Moomoo and Webull.
Regulators ordered the businesses to stop offering or facilitating sports event contracts for Ohio residents by October 16.
The commission warned that failure to comply could lead to administrative action or civil proceedings, with criminal enforcement also possible under state law.
Ohio Governor Mike DeWine subsequently confirmed that authorities intended to pursue companies continuing to offer the products.
“The law is very clear. The court decisions have been very clear. The attorney general of Ohio is taking actions he needs to take. These are not self-executing. You have to actually go out and file these suits, and that’s what we are going to do,” DeWine said.
The regulator has since reported discussions with several affected companies.
One operator has confirmed compliance, while two businesses are pursuing litigation. The OCCC has not identified the compliant company or the second operator challenging its actions.
Robinhood has defended its position, stating that its event contracts operate through a CFTC-registered entity subject to federal oversight.
Polymarket is seeking court protection from potential enforcement measures, including financial penalties and the forced cessation of its services in Ohio.
Federal Appeals Ruling Adds to Legal Dispute
Ohio’s enforcement campaign follows a September 25 decision by the US Court of Appeals for the Sixth Circuit involving prediction market operator Kalshi.
A three-judge panel ruled against Kalshi in cases concerning Ohio and Tennessee, finding that its sports event contracts did not qualify as swaps under the CEA.
The court also determined that federal commodities legislation did not override either state’s sports betting laws.
Polymarket’s latest complaint introduces a separate constitutional challenge centred on the impact of Ohio’s licensing requirements on interstate business.
As reported by Deadspin, the company is represented by Gibson, Dunn & Crutcher, a law firm that previously worked with New Jersey in its successful effort to overturn the federal Professional and Amateur Sports Protection Act (PASPA).
That law restricted state-authorised sports betting until the US Supreme Court invalidated it in 2018.
Gaming attorney Daniel Wallach has highlighted the firm’s involvement in the current dispute, given its earlier work supporting state authority over sports wagering.
The federal court in Ohio must now consider Polymarket’s request for injunctive relief and determine whether the challenged licensing provisions can be enforced against its operations.
No decision on the merits of the company’s latest claims has been announced.