Developing Ohio's New Letter Spares the Sportsbooks and Aims at the Plumbing. The Vendors It Targets Have No Way to Comply Except to Leave

Editor's note: TrueEdge builds odds and prediction-market tools and earns affiliate commissions from licensed sportsbooks. We have argued in labelled commentary against criminalising federally regulated exchanges. Weigh this piece with that in mind.

On Tuesday, October 20, the Ohio Casino Control Commission sent a letter to every company and person that holds a licence from it: sportsbooks, fantasy operators, management service providers, suppliers, key employees, testing laboratories, integrity monitors and applicants. It gives them until Friday, October 30 to confirm in writing that they no longer support anyone offering sports event contracts to people in Ohio without an Ohio licence, and to keep the records behind that answer. The commission's interim executive director, Andromeda Morrison, signed it. It names no one.

The letter matters more than the ten cease-and-desists Ohio sent on October 2, and the reason is in what it chooses not to do. It does not threaten the big sportsbooks. It goes after the businesses that supply the exchanges, and for most of them it leaves only one way to comply: get out of the business.

What the letter actually asks for

The commission says it is "deeply concerned by reports that certain commission licensees continue to facilitate, support" unlicensed sports event contracts, and it lists what it has heard about: liquidity provision, market making, integrity monitoring, equipment, data security and "other technology services." Doing that work, the letter says, "reflects on the licensee's character, integrity, honesty, and reputation." Those words come from Ohio's suitability standard. A licensee that stays involved faces a reopened suitability investigation and, at the end of it, possible denial, non-renewal, suspension or revocation.

At Wednesday's commission meeting, as CDC Gaming reported, Morrison said continued support "may impact their future and ongoing suitability," and added: "I think we are all united in our belief that the Commission cannot sit utterly by while watching Ohio law be violated." Holland & Knight, in an alert the same day, called it the first true cease-and-desist to all of a state's sports gaming licensees, and pointed out that it escalates a warning the commission first issued in August 2025.

Who can comply, and who cannot

The most useful detail in the letter is a carve-out. Per Sports Betting Dime, a licensee that is a futures commission merchant or an introducing broker counts as compliant as long as it does not let Ohio customers reach sports event contracts listed on a federal exchange. That covers the brokerages. They already know where their customers are, and turning off a product in one state is routine work for them.

It also covers the sportsbooks. Casino.org counts 13 online books under the commission. FanDuel and DraftKings run sports prediction markets only in states where they do not hold sportsbook licences. Covers' account of Jason Robins' appearance at the NEXTPredict conference in New York on Thursday restated that DraftKings does not offer sports contracts where it runs state-regulated sports betting. Ohio is one of those states. As far as anything public shows, the largest operators in the market are already compliant.

Now take the rest of the list. A market maker quoting on a national order book sees orders, not addresses. Unless the exchange passes customer location to the maker, which we have no evidence any exchange does, the firm cannot quote everyone except Ohioans. A data-security or technology vendor builds a product for the exchange as a whole. An integrity monitor is the starkest case. Under Ohio Administrative Code 3775-14-04, a certified monitor must "share reports of unusual sports gaming activity with other certified independent integrity monitors" and report to the commission. If the same firm watches a prediction market's sports contracts, it is monitoring a book that does not stop at the state line.

For these businesses, "stop facilitating it in Ohio" in practice means one of two things: stop serving the exchange, or give up the Ohio licence. That is the design. Earlier this week, Utah named Susquehanna as a defendant alongside Kalshi, calling the liquidity provider part of the nuisance. Ohio has reached the same pressure point without filing a lawsuit.

Why this is harder to fight than a cease-and-desist

The exchanges' main argument in every state is federal preemption: Congress gave the CFTC exclusive jurisdiction over contracts on designated exchanges. Polymarket's U.S. exchange, QCX LLC, made that argument again on October 16, suing Attorney General Andy Wilson and the commission in the Southern District of Ohio on the day its cease-and-desist deadline expired. Its complaint leans on the CFTC's October 9 interim final rule, which took effect on October 19, and on a Commerce Clause claim: Ohio caps type A online proprietors at 25 and requires an in-state place of business.

That case is about whether Ohio can stop an exchange. The new letter is about whether Ohio can decide who keeps a gaming licence, a power that sits at the centre of what states do. A vendor whose licence is pulled over prediction-market work would have to argue that federal commodities law stops a state from weighing that work when it judges character and integrity. We do not know of a court that has decided that question. We also doubt that a market-making desk would want its Ohio supplier licence to be the test case.

The weak point is the date. The Sixth Circuit's September 25 decision is what lets the commission call this activity illegal in Ohio, and Kalshi asked for rehearing on October 9. If that ruling is narrowed, the letter's premise goes with it, but a vendor that has already left the exchange business will not be back by then.

The best case for Ohio

The strongest counterargument is simple, and much of it holds. A gaming licence is a privilege. Suitability exists so a state can refuse to license people whose other business it considers unlawful. Ohio's position, upheld for now by a federal appeals court, is that sports event contracts offered to Ohioans are unlicensed sports gaming, a felony under its statute. A state that licenses an integrity monitor to protect its own market has a fair claim to ask whether that monitor is also servicing what the state considers an illegal one. And the commission points to real harms: it says these platforms let 18-year-olds trade sports contracts in a 21-and-over state, outside its approved-markets list and its responsible-gambling rules. On the age point, the federal side has no good answer.

What Ohio's case does not address is proportionality. The letter covers every licence category and every service without defining "support," and Holland & Knight lists that as an open question: how far down the vendor chain does it reach? A testing lab that once certified software for a firm that later listed sports contracts has no idea whether it is in scope. Gov. Mike DeWine said this week that cease-and-desists "are not self-executing" and that the state will sue. A letter that leaves its recipients unsure whether they are covered does that job without a filing, because vendors will cut ties to be safe and nobody will ever have to defend it in court.

What we are watching

Three things before and after October 30. First, whether any supplier says publicly that it has dropped an exchange client. That would be the clearest sign the letter worked as intended. Second, whether the commission publishes the responses or names anyone who failed to reply. Morrison said talks with several of the original ten are "productive" and one has complied, but she did not name it. Third, whether another state with a large licensee base copies the letter. Utah went to court and Ohio went through its licences. A third state choosing either route would show the strategy has shifted from going after exchanges to going after their suppliers. We will report it when it happens.