Opinion: Prediction markets threaten public trust in Ohio

Ohio recently took an important step when the Ohio Casino Control Commission imposed a $5 million fine against Kalshi for operating unlicensed sports gaming activities in our state. The action reinforced a simple principle: companies cannot ignore Ohio law simply because they operate through newer technology platforms.

But this issue goes far beyond one company or one fine.

Prediction markets and event-based wagering platforms now allow users to place financial bets on elections, wars, economic decisions, regulatory actions and public policy outcomes. These platforms often market themselves as financial innovation, but they also create serious ethical risks when individuals with inside information can potentially profit from government actions before the public knows what is coming.

Recent events demonstrate why lawmakers can no longer treat these concerns as hypothetical.

Last week, the U.S. Senate unanimously approved a resolution led by Ohio Sen. Bernie Moreno banning senators and Senate staff from participating in prediction markets. The bipartisan vote reflected growing concern that public officials should never be in a position to financially benefit from privileged governmental knowledge.

At nearly the same time, federal prosecutors charged a U.S. Army Special Forces soldier with allegedly using classified military information to place profitable prediction-market bets tied to the capture of Venezuelan leader Nicolás Maduro. Prosecutors say the bets generated more than $400,000 in profits using nonpublic operational knowledge.

Those developments should serve as a warning.

If classified military intelligence can allegedly be monetized through prediction markets, it is not difficult to imagine similar ethical dangers involving regulatory agencies, elections, procurement decisions or legislative action. Even the appearance that public officials or insiders could profit from confidential government information damages public trust, which is already precarious at best.

That is why I will soon introduce the Ohio Public Employee Event-Wagering Ethics Act.

The legislation would prohibit Ohio public officials and employees from participating in event-based wagering platforms or maintaining accounts on such platforms. It would establish additional safeguards for individuals in especially sensitive positions, including employees of the Ohio Casino Control Commission and statewide elected officials.

The proposal would also prohibit the use or disclosure of nonpublic government information for wagering purposes, require disclosure of prior participation through annual ethics filings, restrict certain financial relationships with event-wagering companies and authorize enforcement through the Ohio Ethics Commission.

This is not an attack on legal recreational sports betting. Ohio already regulates sports gaming through a lawful framework approved by the state. This legislation instead addresses a rapidly evolving gray area where gambling, financial speculation, politics and insider information increasingly overlap.

The recent enforcement action against Kalshi also demonstrates why Ohio needs stronger deterrence mechanisms. A flat fine may sound substantial, but if companies generate far greater revenue while operating unlawfully, penalties risk becoming little more than a cost of doing business.

Meaningful enforcement requires consequences tied directly to the profits generated through illegal activity.

Licensed operators in Ohio follow the rules, pay taxes and comply with state oversight requirements. Unlicensed entities should not be permitted to undercut lawful businesses while avoiding the same responsibilities.

Technology is evolving faster than our ethics laws. If government waits until after a major scandal occurs, public confidence will already be damaged, possibly beyond repair.

Ohio has an opportunity to lead by modernizing ethics standards before these risks become deeply embedded in our political and regulatory systems. Public service must never become an opportunity for financial speculation based on privileged access or insider knowledge.

The rules must evolve as the markets evolve.