Robinhood and Coinbase halt Ohio sports contracts after cease-and-desist

Four prediction market firms, including Robinhood and Coinbase, have agreed to stop offering sports-event contracts in Ohio after the state's Casino Control Commission sent cease-and-desist orders to multiple platforms. Plus500US had already complied. Two other firms chose a different path and sued the state. Three more are in active discussions with Ohio regulators.

The compliance split matters more than the headline numbers suggest. Robinhood and Coinbase are not prediction market specialists. They are federally regulated financial infrastructure companies with retail brokerage and exchange licenses in dozens of states. When the Ohio Casino Control Commission sent those letters, the calculus for Robinhood was different from the calculus for Kalshi. A prediction market is Kalshi's entire business. For Robinhood, it is a product line sitting inside a regulated entity that cannot afford to become the face of a multi-state enforcement action.

That is the structural distinction the coverage keeps missing. The firms that complied are not conceding that Ohio has the better legal argument. They are conceding that Ohio has the better leverage over them specifically. This is not a ruling on federal preemption. It is a rational business decision made by companies whose exposure extends well beyond sports-event contracts.

The CFTC chairman's order, requiring designated contract markets to end geofencing within thirty days, sits directly in tension with what just happened in Ohio. Robinhood and Coinbase have now done the thing the CFTC order says they should not do. Whether the Commission treats voluntary state compliance as a violation of its own impartial access requirements is not on the public record, but the gap between the order's text and these companies' actions is now a live problem for Chairman Selig, not just for the state regulators.

The two firms that sued Ohio are running the Kalshi playbook: litigate the federal question directly, force a court to choose between the Commodity Exchange Act and state gambling authority, and hope the circuit split eventually produces a Supreme Court resolution that settles it everywhere at once. That strategy has a logic. It also carries the costs that former CFTC counsel Peter Sanchez Guarda identified when discussing Utah's turn toward criminal prosecution — aggressive federal litigation teaches state regulators that administrative tools are insufficient, and some of them draw the conclusion that criminal referrals are the next available move.

Ohio has not gone to criminal charges. But the pattern Guarda described in Utah applies here: each time a platform responds to a cease-and-desist with a federal lawsuit rather than compliance or negotiation, the jurisdictions watching recalibrate what their next letter will say.

The Commodity Exchange Act's preemption provision does not distinguish between companies by size or business model. Under 7 U.S.C. § 7a-3, a designated contract market operating in compliance with CFTC core principles is entitled to offer contracts without state interference — the statute does not carve out an exception for firms that also hold state brokerage licenses. Whether a firm that voluntarily withdrew from a state to protect those licenses has waived any preemption argument it might later raise is a question courts have not addressed in this context.