Ohio Regulator Threatens Sportsbook Licenses Over Prediction Markets

The Ohio Casino Control Commission has told the state's licensed online sportsbooks to cease all prediction market services tied to sports event contracts immediately, in a letter dated October 20. Interim Executive Director Andromeda Morrison warned that providing those services puts their Ohio operations at risk.

Morrison wrote that she was "deeply concerned" by reports that licensees still "facilitate, support, or otherwise provide services" to those markets. According to reports, some Ohio sportsbooks have supplied liquidity and market making to the platforms, along with integrity monitoring and data security.

A market maker stands ready to take either side of a contract so traders can always find a price. In our reading, a licensed book doing that work supplies the depth that makes these platforms usable, and Ohio now treats that as a licensing question.

Suitability is the lever

A gambling license rests on the holder being found suitable, a judgment about its fitness to operate. Morrison's letter ties support for unlicensed sports prediction markets directly to that test.

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. Such conduct also undermines public confidence in Ohio’s regulated sports gaming and fantasy contest markets

Licensees that do not comply risk having their suitability reopened, the commission said, and a finding of unsuitability could lead to suspension or revocation. The commission regulates 13 online sportsbooks, according to reports, including FanDuel and DraftKings. Both run sports prediction markets in states where they hold no sports betting license, reports say.

A court ruling opened the door

In September, a federal appeals court in Ohio ruled that sports event contracts are not swaps under the exclusive jurisdiction of the Commodity Futures Trading Commission. Had they been, federal law would have left the CFTC in charge. The ruling affirmed Ohio's authority to enforce its sports betting laws.

In early October the commission sent cease-and-desist notices to 10 sports prediction market platforms, which reports say offer sports markets inside Ohio. The new letter moves from the platforms to the licensed operators working with them.

A governor who regrets legal betting

Republican Gov. Mike DeWine has been open about his doubts. He said in January that signing the sports gaming bill was the first mistake he would name.

DeWine said sports betting had caused a "huge problem" among young men. "We have many of them addicted, many of them spending money that they do not have," he said.

DeWine is term-limited, and Ohio elects his successor on November 3. Prediction markets make Democrat Amy Acton the heavy favorite at 79 cents a share, with Republican Vivek Ramaswamy at 21 cents.