This week, the Ohio Senate introduced a bill that aims to compel prediction markets to pay the same licensing fees and taxes as mobile sportsbooks in the state, further intensifying the ongoing legal conflict between state gaming commissions and prediction markets offering sports event contracts.
Until this regulatory tug-of-war is finally resolved, many bettors looking for unique wagers will likely just continue taking their action to established offshore sportsbooks.
Ohio Squares Off Against Prediction Markets
Prediction markets have been wreaking havoc with state gaming regulators across the nation, and Ohio is at the vanguard in attempting to thwart their efforts to offer sports event contracts. In the latest salvo, Ohio State Senator Bill DeMora introduced Senate Bill 430 this week, a measure that would compel prediction markets like Kalashi to pay an initial licensing fee of $500,000 (plus $150,000 annually thereafter) and 20% of its revenue to the state, the same as Ohio’s mobile sports betting platforms.
“They made billions and billions of dollars last year, and they didn’t have to pay taxes because they skirt the laws, and as far as I’m concerned, they ought to be like everybody else and pay their fair share,” said State Senator DeMora. “I mean, this is something Ohio is losing $200, $300 million in revenue on, and it’s gotta stop. They need to pay taxes, and they need to pay the license fee.”
The prediction markets have been operating in all 50 states with impunity due to their status as a licensee of the Commodity Futures Trading Commission (CFTC). That hadn’t been an issue when they were selling trading contracts on gold, silver, and other commodities.
However, when Kalshi began offering sports event contracts that essentially mirrored sports betting lines, the state gaming commissions became aware that they were cannibalizing a portion of the mobile sportsbooks’ revenue without paying a penny in state taxes.
Age of Consent
The Problem Gambling Network of Ohio not only has an issue with more gambling being introduced to the Buckeye State, but also that the age of consent to engage in federal prediction market contracts is 18, three years below the minimum age of 21 in Ohio to wager on sports.
“We saw it when sports betting was legalized that it was the greatest expansion Ohio had ever seen and really for the first time brought betting to the palm of your hand 24/7, and as we look at prediction markets, there’s that much access plus so much more because the age of participation goes from 21 to 18, and that’s assuming that they’re using appropriate age verification, which some reports show they are spotty at best,” said Derek Longmeier, executive director.
Even if Senator DeMora’s bill does pass, the state’s ability to enforce it will likely be years away. Ultimately, this great betting debate has been stalemated in the state and federal courts, with both sides winning and losing legal rounds.
As of this writing, prediction markets in virtually all 50 states continue to offer sports event contracts. The CFTC had taken a laissez-faire approach, but now that the agency has a new chairman in Michael Selig, it has become a zealous advocate on behalf of its licensees.
Ultimately, the matter is an issue that will likely end up at the US Supreme Court, where the justices can decide whether the federal authority of the CFTC supersedes that of the state gaming commissions or if state gaming regulators have the final say in who can and cannot offer sports betting opportunities.
