Maryland regulator warns operators to stay out of sports predictions
The Maryland Lottery and Gaming Control Commission (MLGCC) has joined the group of gaming regulators warning licensees that offering sports prediction markets anywhere in the U.S. could have negative repercussions for their state license.
The commission sent a letter to all licensees on Nov. 19 in which it stressed that sports event contracts on designated contract markets (DCMs) constitute an illegal activity in Maryland.
“All Maryland licensees and operators are reminded that any ‘illegal activity,’ in any jurisdiction, may bear negatively on your qualifications for a Commission-issued license, registration or certification in Maryland,” wrote the lottery.
Direct or indirect, it’s all the same
Maryland is at least the seventh state to have issued some kind of official notice to gaming licensees about prediction markets. Some of those, including regulators in Arizona, Nevada and Ohio, have cautioned that even participating in event contracts out of state could impact operators’ in-state status, something that was echoed by the New York State Gaming Commission this week.
The Maryland Lottery added in its letter that it considers any direct or indirect association for financial gain with an entity that allows people to buy, sell or trade sports event contracts on a DCM to be illegal, whether that happens in Maryland or in another jurisdiction where such activity is not authorized.
That definition would seem to apply to FanDuel, DraftKings and Fanatics, three Maryland-licensed online sportsbooks that have announced plans to launch prediction market platforms. Underdog and PrizePicks offers limited DFS menus in Maryland with no version of its Pick’em game. Both offer sports event contracts in some other states via deals with DCMs Crypto.com and Kalshi, respectively.
Maryland takes the fight to DCMs
The MLGCC was one of the most decisive early-moving state regulators as sports contracts began to emerge across the U.S. It sent cease-and-desist letters to Kalshi and Fanatics’ new partner Crypto.com, as well as Kalshi partner Robinhood, as far back as April.
Both Kalshi and Crypto.com quickly sued the lottery, arguing that the Commodity Futures Trading Commission (CFTC) has the sole right to regulate and oversee event contracts and that Maryland overreached. Maryland District Court Judge Adam Abelson denied Kalshi’s request for a temporary injunction against the lottery on Aug. 1. Kalshi had won preliminary injunctions in Nevada and New Jersey before its Maryland setback.
Kalshi later withdrew a follow-up motion for an injunction after the Maryland regulator agreed to a ceasefire pending a Fourth Circuit Court of Appeals decision on Kalshi’s appeal of Abelson’s decision.
The Maryland Lottery specifically noted in its Nov. 19 letter to licensees that offering sporting event contracts is illegal without a valid Maryland sports wagering license. In one of his reasons for denying Kalshi’s injunction in August, Abelson wrote that he sees no reason why Kalshi can’t apply for a sports betting license in Maryland in order to offer their contracts.
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