Polymarket’s U.S. exchange has filed a lawsuit in federal court against Ohio’s attorney general and casino regulators, asserting that the state’s sports gaming licensing regulations unfairly discriminate against businesses located outside of Ohio and cannot be enforced against a federally regulated exchange.

Under the name QCX LLC, Polymarket US submitted its complaint on October 16 in the U.S. District Court for the Southern District of Ohio. This filing follows the Ohio Casino Control Commission’s deadline for the company to confirm that it ceased offering sports event contracts within the state.

Polymarket US contends that the situation presents them with two unfavorable choices: continue operations at the risk of legal action, or eliminate Ohio users and retract their ongoing positions.

The company claims that both scenarios would lead to irreparable harm unable to be addressed by financial compensation. The complaint highlights two primary grievances, with the first focusing on the framework of Ohio’s sports gaming legislation. It points out that type A online sports gaming licenses are only awarded to applicants that maintain a physical business presence in Ohio or operate a sports gaming facility there.

The commission is required to evaluate applicants based on their physical establishment in Ohio, the duration of their business presence, and their contributions to the local economy. Additionally, the commission is limited to licensing a maximum of 25 operators unless deemed otherwise necessary.

Furthermore, Polymarket US criticizes regulations that mandate the servers for accepting wagers to be located within a secure facility in Ohio and stipulate that licensees may only accept bets from individuals physically present in the state.

The complaint labels these measures as discriminatory and fragmentary, arguing that they violate the Constitutional principle of free interstate commerce.

Additionally, it points out that Ohio’s own regulations weaken any non-protectionist justification, as the state permits the commission to recognize licenses from other jurisdictions as a standard for assessing a provider’s qualifications and allows sportsbooks to mitigate risk through a liquidity pool from outside Ohio.