Maryland joins other US states in warning licensed operators over prediction markets

• Maryland’s Lottery and Gaming Control Commission warns licensed operators about licence risks from involvement in unregulated prediction markets.
• FanDuel, DraftKings, and Fanatics plan prediction market launches despite regulatory cautions.
• Maryland aligns with states like Massachusetts, Nevada, and Ohio in issuing warnings on prediction market operations.

Maryland has officially joined a growing number of US states warning licensed gambling operators against participating in unregulated prediction markets.

The Maryland Lottery and Gaming Control Commission cautioned that any involvement in such markets could jeopardize operators’ licenses under Maryland’s sports betting regulatory framework. This action reflects broader regulatory concerns as leading sportsbooks prepare to launch prediction market platforms.

Formal memo sent to operators

The Maryland Lottery and Gaming Control Commission (MLGCC) issued a formal memo alerting licensed sportsbooks, land-based casinos, digital betting firms, and daily fantasy sports providers that engaging directly or indirectly in unlicensed prediction markets constitutes illegal activity.

The Commission stated that sports event contracts available on designated contract markets (DCMs) without a valid Maryland licence violate state law and could impact licence eligibility. Maryland’s approach includes daily fantasy sports operators under its regulatory scope, unlike some other states.

John Martin, secretary of the MLGCC, wrote:

“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,” Martin’s release noted.

“Accordingly, any direct or indirect association, for any financial gain, with any unlicensed person that allows individuals to buy, sell, or trade sporting event contracts on a DCM is an ‘illegal activity.’”

Upcoming launches

Despite regulatory concerns, major operators licensed in Maryland are advancing prediction markets.

FanDuel plans a launch in partnership with CME Group next month. DraftKings, following its acquisition of Railbird, aims to offer prediction markets in the coming months. Fanatics CEO Michael Rubin announced the company’s prediction market launch, alongside Crypto.com, also set for the next couple of weeks.

Both FanDuel and DraftKings have recently left the American Gaming Association, signalling strategic shifts towards independent prediction market platforms.

Nationwide regulatory context

Maryland joins other states including Massachusetts, Nevada, and Ohio, which have issued warnings or cease-and-desist orders related to prediction markets. Previously, Maryland sent a cease-and-desist to the prediction market Kalshi, resulting in ongoing litigation.

Prediction markets allow users aged 18 and over to trade contracts on events beyond sports, such as politics and entertainment, complicating existing regulatory frameworks. Regulators remain concerned about consumer protections and tax compliance in this emerging sector.

Implications for the gambling industry

Maryland’s warning reflects increased regulatory scrutiny focused on preserving the integrity of licensed operations as innovation drives new wagering formats. Operators face risks if they enter prediction markets without explicit regulatory compliance, potentially threatening their licences.

The evolving environment will likely prompt further engagement between regulators, operators, and investors to navigate legal uncertainties and market opportunities.

Sources: Yahoo