Maryland regulators press illegal online gaming operators, flag prediction markets as sports-wagering risk

The Maryland Lottery and Gaming Control Agency told the Ways and Means Committee on Jan. 21 that it has stepped up enforcement against illegal online casino‑style offerings and is challenging prediction‑market platforms that it says have crossed into unlicensed sports wagering.

Agency Director John Martin said the department sent cease‑and‑desist letters in April 2025 to Kalshi, Robinhood and crypto.com, arguing their sports‑style products required a state sportsbook license. "We sent a cease and desist letter in April '25 to Kalshi, Robinhood, and crypto.com because we perceive that their offering of sports wagering crossed the line," Martin said.

Martin said the agency has contacted more than 75 illegal operators since May 2024; 23 "agreed to leave or modify their games to make them legal," 17 responded without taking action, and 35 did not respond. He described proliferation of sweepstakes‑style and offshore games that do not collect state taxes, lack ID and age verification, and offer limited consumer protections.

The agency is also monitoring litigation. Martin said Maryland prevailed in a lower court ruling where the operators sued the state and that appeals are pending. He cited a recent Massachusetts injunction affecting Kalshi and said that state courts have sided with regulators in similar cases.

On prediction markets that do not involve sports outcomes, Martin said they may continue to operate in Maryland for non‑sports questions (for example, who will win an award), but "the minute they cross that line and get into … sports, that's where we'd rather we come down and say stop. You can't do that here. And we have the momentum with a number of other states around the country." He emphasized that firms offering sports wagering must obtain a license to operate in Maryland.

Martin also outlined proposed legislation the agency supports: an OLA‑driven bill to align gaming interception of debts with the lottery side, rulemaking to limit how much free promotional play operators can exclude from taxable proceeds, and a bill to define illegal internet gaming and authorize penalties for operators.

The briefing included broader gaming metrics: Martin said sports wagering handle in early FY26 exceeded $3.5 billion, prizes paid to players topped $3.1 billion, the industry hold was about 11.9%, and contributions to the state from sports wagering in the first six months were about $78.6 million.

Committee members asked whether the state should expand regulatory oversight of prediction markets to capture more revenue and to protect vulnerable players; Martin said operators could apply for licensing but many have resisted doing so and that some firms may argue federal (CFTC) jurisdiction instead of state oversight. He urged continued coordination with other regulators and noted the agency is using public posting and cease‑and‑desist letters to reduce illegal activity.

The committee did not take formal action during the hearing; Martin said the agency has posted license lists and copies of enforcement letters at mdgaming.com and will continue to pursue both administrative and legislative tools.