Maryland’s gambling regulator Thursday became the eighth across the U.S. to send a letter to licensed sports betting operators telling them that offering prediction markets could cost them their licenses.
In a letter addressed to land-based casino and sportsbook operators, digital sports betting operators, and daily fantasy (DFS) operators, the Maryland Lottery and Gaming Control Commission (MLGCC) wrote that it has “determined that a sporting event contract offered on a designated contract market (‘DCM’) without a valid Maryland sports wagering license is an ‘illegal activity’ in our state because this is unlawful sports wagering.”
The MLGCC wrote that any involvement with a prediction market “in any jurisdiction” could “bear negatively” on a Maryland license. The commission went on to detail that any “direct or indirect association for financial gain” will be considered “illegal activity.”
In the last two weeks, DraftKings, Fanatics Sportsbook, and FanDuel — all licensed in Maryland — have announced their intent to launch prediction markets. FanDuel plans to do so next month in partnership with CME, DraftKings will launch in “the coming months” after acquiring CFTC licensed Railbird, and Thursday, Fanatics CEO Michael Rubin told CNBC’s Sara Eisen that his company has partnered with Crypto.com and will launch next month.
PrizePicks, Underdog already in the game
Unique to the Maryland letter is that daily fantasy sports operators were included. In many states, DFS platforms are unregulated, but in Maryland, they fall under the purview of the MLGCC, and are regulated and taxed by the state.
Underdog, which is already live in some states, including California and Texas, with prediction markets in partnership with Crypto.com, is licensed in Maryland. PrizePicks, which launched its prediction product in partnership with Kalshi Nov. 14, is not listed as a licensed DFS operator in Maryland.
DraftKings and FanDuel both hold sports betting and DFS licenses in Maryland while Fanatics is a licensed sports betting operator. BallyBet, bet365, BetMGM, betParx, BetRivers, Caesars Sportsbook, Crab Sports, LetsBetMD, and Penn Entertainment (currently operating ESPN Bet but pivoting to theScoreBet Dec. 1) are also licensed sports betting operators in Maryland.
The state of Maryland is also fighting against prediction markets in court. After it sent a cease-and-desist letter to Kalshi in April directing the prediction market to shutter within its borders, Kalshi responded by filing a lawsuit. That case is now in process in the Fourth Circuit. A judge previously decided that Kalshi should pull its platform down in the state, but both the state and Kalshi agreed to let it operate until the case is decided.
No enforcement action yet
So far, regulators in Arizona, Illinois, Massachusetts, Michigan, Nevada, and Ohio have sent letters to operators regarding prediction markets. The content varies, but every letter at least warns operators against operating prediction markets within the jurisdiction that sent the letter. DFS is legal in Arizona, Massachusetts, Michigan, and Ohio, but letters from those states were addressed to digital wagering companies.
Many, like Maryland, also wrote that involvement in prediction markets in any regulated U.S. jurisdiction could result in action. Sources also say that while no similar letters have gone out to suppliers, some states have asked suppliers to provide a list of customers.
No state has revoked an operator license or issued a fine, but FanDuel surrendered its license in Nevada and DraftKings withdrew “inactive” license applications, according to the Nevada Gaming Control Board Nov. 12.
