Maryland Regulators Seek Guidance from Federal Authorities on Gaming

Maryland gaming regulators called on federal officials

The records raise questions about the independence of the Maryland Lottery and Gaming Control Agency, which is responsible for regulating the state’s gambling industry but relied on language written by the industry’s chief lobbying organization before sending an official policy position to federal regulators.

Documents obtained through a public information request show the American Gaming Association (AGA), which represents commercial casinos, provided Maryland officials with a sample letter urging the Commodity Futures Trading Commission (CFTC) to prohibit sports-related event contracts offered by companies including Kalshi and Polymarket.

Eight days later, in April 2025, the Maryland agency sent a letter to the CFTC that matched the AGA draft's substance word for word, with only state-specific language added.

Sports event contracts, such as those with Kalshi and Polymarket, are now trading on markets overseen by the CFTC, which, for example, allow people to place money on whether Team USA will win its next World Cup game.

The dispute is part of a growing national battle over whether sports event contracts should be regulated as federally overseen financial products or as sports betting subject to state gambling laws.

Analysis by experts

Sean Patrick Maloney, president and CEO of the Coalition for Prediction Markets, which lobbies on behalf of companies such as Kalshi, described the Maryland letter as a “smoking gun.”

“This is a great example of the fox guarding the henhouse. If you've got casino lobbyists writing the official talking points and letters of Maryland state gaming officials, well, they clearly have no independence,” Maloney, a former Democratic congressman from New York, told Spotlight on Maryland. “You’ve got a smoking gun. They’re clearly taking their marching orders from the casino lobbyists. That’s not what the citizens of Maryland deserve. They deserve people doing the public’s work, not running errands for casino lobbyists.”

Documents reviewed by Spotlight on Maryland show that John Martin, the director of the Maryland Lottery and Gaming Control Agency, emailed colleagues on April 22, 2025, noting “possible action” through a “sample letter to be emailed to the CFTC Commissioners,” which he specified was “provided by the American Gaming Association (AGA).”

John Holden, a professor of business law at Indiana University who focuses on sports betting regulation, said trade associations like AGA often draft letters and talking points for government officials. He said the broader issue of sports event contracts has created a complicated legal fight over who should regulate them— a dispute he said could ultimately reach the U.S. Supreme Court and may also require action from Congress.

“Right now, we’re in a pretty complex time because really no one knows who should be making the move here,” Holden told Spotlight on Maryland. “We have conflicting court decisions all around the country basically saying that the CFTC should have exclusive jurisdiction versus some courts saying that the states should have jurisdiction. And what you end up with is this whole mess of competing jurisdictions with competing interpretations as to who has control here.”

Maryland Attorney General Anthony Brown joined a bipartisan coalition of 41 attorneys general in May 2026, urging the CFTC to recognize state authority over sports-related event contracts.

Holden said the rapid expansion of legal sports betting in the United States created a system where state regulators work closely with the casino industry they’re tasked with overseeing.

“I think there is a complex relationship between state regulators and the gaming industry,” Holden said. “The way that sports betting came about fairly rapidly in this country meant that there was not a lot of expertise. I think that there should be a push for more independence, as expertise on regulation is building that wasn’t there in the past.”

When asked about the AGA-drafted letter, a spokesperson for the Maryland Lottery and Gaming Control Agency said the agency acts “independently.”

“Maryland Lottery and Gaming independently evaluated this issue and determined its stance based on what is in the State's best interests,” the agency’s spokesman emailed Spotlight on Maryland. “On April 7, 2025, the Agency sent cease-and-desist letters to Kalshi, North American Derivatives (doing business as Crypto.com) and Robinhood regarding their sports prediction markets.”

A spokesman for AGA defended the policy position in the letter but did not dispute that the draft was provided to Maryland officials before the agency sent it to the CFTC.

“Members of the legal gaming industry create good Maryland jobs, promote responsible gaming, and follow state laws. The so-called ‘prediction markets’ are evading state laws and siphoning significant potential tax revenue funding away from important civic programs in Maryland,” AGA’s spokesman wrote in an email to Spotlight on Maryland. “Our message to everyone is straightforward: Congress intended for sports betting to be regulated at the state and tribal level, and the referenced letter is about defending existing Maryland law for the benefit of all Marylanders.

“It’s understandable that ‘prediction markets’ don’t think it’s appropriate for people to note that ‘prediction markets’ offering sports gambling are ignoring Maryland law, siphoning tax revenue, and refusing to adhere to responsible gaming best practices that protect consumers,” the AGA spokesman continued.

The AGA estimates that sports event contracts on prediction markets have cost states more than $1 billion in tax revenue.

Maloney rejected the AGA’s argument, noting that prediction markets operate differently from casinos and sportsbooks.

“What’s different is that the casino has a business model where it wins when you lose,” Maloney said. “A sportsbook will kick you off if you win too much. An exchange has no such incentive. It just takes a small fee, and two equally situated counterparties can trade. That’s why consumers prefer prediction markets.”

Maryland raised about $125 million in state revenue through taxes on sports betting in fiscal year 2026, which was a 56.5% increase from the prior year, according to data published by the Maryland Lottery and Gaming Agency.

Maloney said Maryland regulators should dismiss the cries of casino lobbyists and let the CFTC continue monitoring sports-related contracts.

“It's hard to be independent because in this case, they've clearly failed to be,” he said of Maryland gaming regulators. “They should let the federal government be the effective cop on the beat for national financial markets, as we have seen in the futures markets.”