Maryland Joins States Targeting Sports Prediction Markets

Maryland has become the fifth state to take action against companies offering sports prediction markets, a type of betting where users predict outcomes of sporting events. The Maryland Lottery and Gaming Control Commission has sent cease-and-desist letters to Kalshi, Robinhood, and Crypto.com, instructing them to stop offering contracts related to sporting events within the state.

With this move, Maryland joins Nevada, New Jersey, Ohio, and Illinois in challenging what they consider to be de facto sports betting, which they argue bypasses state regulations and licensing requirements.

Legal and Consumer Protection Concerns

John Martin, the director of the Maryland Lottery and Gaming Control Commission, emphasized that the state views this issue from both a legal and consumer protection perspective. “There is also a fiscal interest for the state,” he said in a press release. Maryland's legal sports wagering operators, Martin pointed out, undergo a strict licensing process and are subject to a range of regulations, including those designed to ensure responsible gaming. However, companies like Kalshi, Robinhood, and Crypto.com are not held to the same standards, which Maryland officials say puts consumers at risk.

Additionally, Martin noted that these companies avoid paying sports wagering taxes, which legal operators are required to collect and remit to the state. “Commodity traders aren't bound by those same guardrails,” he said, referring to the lack of regulatory oversight on these prediction market platforms.

Legal Violations and State Requirements

The cease-and-desist letters from Maryland argue that the platforms in question are in violation of the state's gaming laws, which specifically define what constitutes sports wagering. According to these laws, betting on the outcome of a sporting event must be done through licensed sports wagering operators. Furthermore, the state requires that participants in sports betting be at least 21 years old and physically located within Maryland's borders. These are rules that Kalshi, Robinhood, and Crypto.com currently do not follow, making their activities illegal in the eyes of Maryland’s regulators.

Maryland is not the first state to take action against these companies. Illinois, Ohio, Nevada, and New Jersey have also sent similar cease-and-desist letters in recent months. In fact, Illinois was the most recent state before Maryland to target Kalshi, Robinhood, and Crypto.com, sending their own cease-and-desist orders just days before Maryland’s action. Ohio followed suit, issuing a similar order last week.

Meanwhile, Kalshi, one of the companies involved, has filed lawsuits against the gaming regulators in Nevada and New Jersey after receiving cease-and-desist letters from those states. The outcome of these legal battles could have significant implications for the future of sports prediction markets across the United States.

 

Commodity traders aren't bound by those same guardrails, and they're conducting sports wagering without a license.

The Future of Sports Prediction Markets

As more states challenge the legality of sports prediction markets, the debate over whether these platforms are a form of illegal sports betting continues to grow. While some argue that they are simply offering a new way for people to engage with sports and financial markets, others see them as an attempt to bypass the strict regulations that govern traditional sports betting.

For now, the outcome of these legal disputes will determine whether sports prediction markets like those offered by Kalshi, Robinhood, and Crypto.com will continue to operate in these states or if they will be forced to comply with state gaming laws. As the number of states taking action grows, the future of these platforms remains uncertain.