The Ohio Casino Control Commission is seeking to fine Kalshi, a prediction market platform, $5 million for allegedly offering unlicensed sports gaming contracts in the state.

Kalshi has argued that it is not subject to state gambling laws and that the federal Commodity Exchange Act preempts Ohio’s regulations, but a judge recently denied Kalshi’s request for a preliminary injunction. The state claims Kalshi is operating an illegal gambling operation, while Kalshi maintains users are engaging in ‘swaps’ rather than traditional betting.

The Ohio Casino Control Commission alleges that Kalshi, a prediction market platform, has been offering sports gaming contracts in the state without the required sports gaming license.

Kalshi sued the commission in October, arguing that the federal Commodity Exchange Act preempts state regulation of its activities. However, a judge last month denied Kalshi’s request for a preliminary injunction, ruling that the court is ‘obligated to avoid absurdity’ and that Kalshi’s ‘prediction markets’ appear to be operating as illegal gambling. Kalshi has appealed the ruling and filed a motion to prevent Ohio from taking any civil or criminal action against the company during the appeals process.