BALTIMORE — The Maryland Lottery and Gaming Control Commission took decisive action on April 7, 2025, issuing cease-and-desist letters to KalshiEX, LLC (Kalshi), Robinhood Derivatives, LLC (Robinhood), and North American Derivatives Exchange, Inc., operating as Crypto.com. The directive orders these commodity trading companies to halt their sports event contract offerings in Maryland, aligning the state with a growing list of regulators targeting unlicensed sports wagering platforms.
The commission asserts that the sports prediction markets provided by Kalshi, Robinhood, and Crypto.com function as sports wagering, as they hinge on sporting event outcomes. Maryland law, under State Government Article §9–1E–01, et seq., restricts sports wagering to licensed operators and mandates safeguards like age verification—requiring participants to be at least 21—and geolocation checks to ensure bets are placed within state lines. These commodity traders, operating without such licenses, bypass these requirements, prompting regulatory concern.
“We view this as a legal matter and a consumer protection matter, and there is also a fiscal interest for the State,” said John Martin, director of Maryland Lottery and Gaming. He emphasized that licensed sportsbooks undergo rigorous vetting and adhere to strict rules, including responsible gaming measures, while these platforms do not. Martin noted that legal operators contribute 15% of taxable proceeds to the Blueprint for Maryland’s Future Fund, supporting public education with nearly $61.2 million in the first eight months of fiscal year 2025 and $150 million since sports wagering began in December 2021. Unlicensed traders, he added, evade these taxes.
Maryland joins New Jersey, Nevada, Ohio, Illinois, and Montana as the sixth state to issue such letters to at least one of these companies. The trio has rolled out sports prediction markets nationwide, sparking a regulatory backlash. Unlike traditional sportsbooks, these platforms operate under federal oversight from the Commodity Futures Trading Commission (CFTC), not state gaming authorities, fueling a debate over jurisdiction. Kalshi, for instance, has filed lawsuits against Nevada and New Jersey, arguing its contracts fall under CFTC purview, not state gambling laws.
In Maryland, only licensed sports wagering and registered fantasy competitions are legal online gaming options. The commission maintains public lists of authorized operators and has posted the cease-and-desist letters on mdgaming.com. Sports wagering’s fiscal impact is significant—since its inception, it has bolstered education funding, a benefit unlicensed platforms undermine by operating outside the taxed framework.
The letters reflect broader consumer protection worries. Licensed operators must verify customer identities and locations, measures absent from these commodity platforms, potentially exposing users—including those under 21—to unregulated betting. The National Council on Problem Gambling highlights that such safeguards are critical to curbing gambling risks, a point echoed by Martin’s call for accountability.
As the sixth state to act, Maryland’s move underscores a trend among regulators to classify these contracts as sports wagering, not financial instruments. The outcome of ongoing legal challenges, like Kalshi’s suits, may shape the future of such markets, but for now, Maryland is firm: unlicensed sports event contracts have no place in the state.
