Maryland Joins Sports Event Contract Betting Clampdown
And then there were 6.
On Monday, Maryland ended up being the 6th state in the U.S. (that we understand thus far) to send cease-and-desist letters to federally controlled "prediction markets" offering de facto sports betting via event contracts.
- Officials in Maryland, Ohio, Illinois, New Jersey, Nevada, and Montana have actually sent cease-and-desist letters in connection with federally regulated sports occasion agreements.
- Those agreements are a growing kind of competitors for state-regulated sportsbooks.
The letters were sent out by the Maryland Lottery and Gaming Control Commission to Kalshi, Robinhood, and Crypto.com, all of which have actually gotten comparable correspondence from other state regulators.
"Kalshi is operating in Maryland and is providing and performing what is, in truth, wagering on sporting events," Maryland Lottery and Gaming Control firm director John Martin wrote in one of the letters. "However, Kalshi does not hold a sports betting license issued by the Commission, its wagers have not been approved by the Commission, and it is not otherwise authorized under Maryland law to use wagers on sporting events."
For these reasons, Martin included, Kalshi and the others are being directed by the commission to "instantly stop and desist these legal offerings" in the state. The prediction markets have 15 days to notify the regulator that they are complying.
The letters from the Maryland sports wagering regulator follow similar ones sent by authorities in Nevada, New Jersey, Ohio, Illinois, and, according to Kalshi CEO Tarek Mansour, Montana.
Join the club
Those efforts represent increasing awareness of and opposition to federally controlled prediction markets like Kalshi. That opposition has increase given that trading expanded to consist of sports results, like the Super Bowl and March Madness.
Sports event contracts are now offering users with the chance to make de facto wagers on numerous games and leagues in all 50 U.S. states, not just the ones that have actually legalized sports betting. Therefore, they are a growing source of competition to state-regulated sportsbook operators like DraftKings and FanDuel.
Kalshi, for example, has helped with more than $380 million in trading in March Madness-related agreements, such as users purchasing "yes" agreements for Houston to win the guys's college basketball champion.
Kalshi, Robinhood, and Crypto.com are likewise all managed by the federal Commodity Futures Trading Commission (CFTC), not states.
In Nevada and New Jersey, where Kalshi is pushing back on the cease-and-desist letters, the business has argued it goes through federal law and oversight.
"We are literally like a monetary exchange, but the underlying trading is events," Kalshi CEO Tarek Mansour stated in a recent TechCrunch interview. "The CFTC is our regulator. If the CFTC informs us to stop, we will definitely stop.