Maryland Directs Kalshi, Robinhood, and Crypto.com to Halt Prediction Market Operations
Stepping up the game: Maryland joins a growing list of states tightening regulations on online sports prediction markets
It's a wrap for Kalshi, Robinhood Derivatives, and Crypto.com in Maryland. The Maryland Lottery and Gaming Control Commission has served cease-and-desist orders to the three companies, telling them to shut down their online sports event prediction markets.
The Commission believes these markets fall under the umbrella of unlicensed sports betting. As Maryland law only permits sports wagering through authorized operators, operating outside this system is a no-go.
Maryland Lottery and Gaming Director, John Martin, clarified the state's stance. "This is a multi-faceted issue-legality, consumer protection, and fiscal interests for the State. Each of Maryland's licensed sports wagering operators has gone through a stringent licensing process, along with various regulations, including responsible gaming requirements."
Martin expresses concern that the companies under question are skirting crucial requirements. "These commodity traders aren't subject to the same safeguards. They're operating unlicensed sports wagering and, as a consequence, evading the collection of sports wagering taxes that legal operators pay to the State."
Under Maryland law, online gaming is only legal if authorized. Currently, only operators licensed for sports betting and registered fantasy sports platforms are allowed to extend their online services. Customer age and identity must be verified, and geolocation tools ensure users are based within the state. Not operating under this system is a no-go for these companies.
Joining the Maryland bandwagon, five other states-New Jersey, Nevada, Ohio, Illinois, and Montana-have already issued similar warnings to at least one of the three companies. But the story doesn't end there. States like Tennessee, Michigan, Arizona, and North Carolina are also keeping a close eye on these platforms. Although they haven't issued cease-and-desist letters yet, they're definitely on the radar.
These actions spell a growing trend of state regulators taking a closer look at prediction markets as they resemble unauthorized sports wagering activities, with operators arguing regulatory compliance under federal oversight by the Commodity Futures Trading Commission (CFTC)[1][2]. But that doesn't fly with the regulators, and things are about to get tougher for these companies.
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Insights: Several other states, such as New Jersey, Nevada, Ohio, Illinois, and Montana have issued warnings against these companies. In addition, Tennessee, Michigan, Arizona, and North Carolina are also monitoring the platforms.
- The Maryland Lottery and Gaming Control Commission has sent cease-and-desist orders to Kalshi, Robinhood Derivatives, and Crypto.com, as they are operating unlicensed sports betting in Maryland, which resembles prediction markets.
- Maryland's stance is that these companies are evading crucial requirements, such as responsible gaming requirements, sports wagering taxes, and geolocation tools that ensure users are based within the state.
- In line with Maryland, five other states - New Jersey, Nevada, Ohio, Illinois, and Montana - have issued similar warnings, while Tennessee, Michigan, Arizona, and North Carolina are also keeping a close eye on these prediction markets.
