Sports prediction markets have been advised to be avoided by Maryland sportsbooks and fantasy sports operators, as state regulators caution that doing so could compromise the validity of their gaming licenses.

The Maryland Lottery and Gaming Control Commission informed its licensed sports betting and fantasy sports operators this week that it believes prediction markets that offer sports-related contracts are "illegal activities" in the Old Line State. Sportsbooks, wagering establishments, and licensed fantasy sports may have their licenses revoked if they engage in such illicit activity.

"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,” the state gaming regulator wrote its sportsbook and fantasy sports partners. “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 … is an ‘illegal activity.'”

Online daily fantasy sports (DFS) and both in-person and online sports gambling are available in Maryland.

Leaders in Sportsbooks at Risk 

FanDuel and DraftKings are the two leading mobile sportsbook providers in Maryland. Other well-known online sportsbooks in Maryland include Fanatics, BetMGM, Caesars Sportsbook, and BetRivers.

The US Commodity Futures Trading Commission's Designated Contract Market (DCM) licenses, which are used by organizations operating under federal supervision, are the subject of the state's warning regarding sports prediction markets.

A number of Maryland-licensed sportsbooks have partnered with DCM-licensed prediction markets in recent weeks to provide sports event contracts in areas like Texas and California that prohibit sports betting.

FanDuel teamed with CME Group for FanDuel Predicts, DraftKings worked with Railbird Exchange for DraftKings Predicts, and Fanatics reached an agreement with Crypto.com. Through these arrangements, sportsbooks with existing DCM permissions will be able to enter sports prediction markets more quickly.

The future of those three sportsbook licenses is called into question by Maryland's warning.

“The Commission hereby notifies that any involvement in the offering of sporting event contracts, directly or via an affiliate, key person, related business entity, or other association, on a DCM without a valid Maryland sports wagering license may have implications to your licensure if done so contrary to regulatory requirements for a sports wagering the license,” the Maryland Lottery and Gaming Control Commission letter continued. “The Commission expects any licensee that is actively pursuing any involvement with an exchange or DCM that is regulated by the CFTC to provide prompt notice to the Commission.”

Nationwide Crackdown

The US Constitution's Supremacy Clause gives prediction markets like Kalshi, Polymarket, Crypto.com, Sportrade, and ProphetX the impression that the law is in their favor. The administration of President Donald Trump is probably in favor of the new "financial" markets, even as Maryland casino authorities join those in Massachusetts, Michigan, Nevada, New York, Ohio, and Pennsylvania in investigating sports prediction markets.

Trump Media is investigating its own entry into prediction markets, while Donald Trump Jr. advises Kalshi and Polymarket. Michael Selig, a close Trump ally who is expected to take over as head of the CFTC, is well-known for supporting a regulatory climate that is favorable to cryptocurrencies.