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Read Full BioCrypto.com has joined prediction market company Kalshi in suing the Maryland Lottery and Gaming Control Commission.
The filing is in response to the agency’s cease-and-desist orders.
Why Crypto.com Believes CFTC Rules Preempt Maryland State Law
“The law is very clear for derivatives and prediction market event contracts, and we are proud to offer these services through a fully compliant and regulated platform,” Crypto.com Chief Legal Officer Nick Lundgren said in a statement. “Our decision to sue the Maryland Lottery and Gaming Control Commission is necessary at this time, and we are fully confident that the existing laws will be recognized and upheld in our favor.”
Maryland has called to eliminate sports-event contract trading, claiming it is an unlicensed form of sports betting. It is already one of six states to issue cease-and-desist orders against predictive market platforms, joining Illinois, Montana, Nevada, New Jersey, and Ohio. Tennessee has also expressed concerns, without going to the same length.
Crypto.com, referred to in the legal filing as “CDNA,” has detailed eight “factual allegations against the Maryland Lottery and Gaming Control Commission. These are as follows:
- The Commodity Futures Trading Commission has exclusive jurisdiction to regulate derivatives contracts in federally registered markets.
- Event contracts are exchange-traded financial instruments used to allocate risk.
- The CEA and CFTC Regulations establish a comprehensive federal regulatory framework for trading in event contracts and other derivatives.
- The CFTC’s enforcement authority over DCMs and its power to prohibit contracts contrary to the public interest.
- CDNA is a federally regulated DCM that lists sports event contracts.
- The Maryland Lottery and Gaming Control Commission threatened CDNA with legal action for offering sports event contracts to Maryland residents.
- The Nevada Gaming Commission has been enjoined from enforcing its gaming laws with respect to event contracts.
- Defendants’ threatened action will imminently and irreparably harm CDNA and interfere with its ability to conduct federally regulated activities.
Crypto.com Leans on Kalshi Nevada Ruling in Maryland
The filing repeatedly references Kalshi’s victory over the Nevada Gaming Control Board, which granted the company’s request for a temporary restraining order and preliminary injunction.
CEO Tarek Mansour has remained a fierce advocate amidst scrutiny, calling prediction markets the “quintessential truth machines” in a social media post last month.
“With trust in traditional institutions at an all-time low, people are turning to prediction markets at an astronomical pace,” Mansour wrote on X, the site formerly known as Twitter. “The growth of the ecosystem in the last year is a testament to how important they have become to the American people.”
Kalsh’s very similar lawsuit against Maryland alleged that the state’s actions could cause “irreparable harm” to its business.
While sports betting is legally operative in only 38 states plus Washington, D.C., prediction markets — in which users can buy and sell contracts for real-world events such as the Super Bowl and March Madness — are available in all 50 states.
Crypto.com Claims State Actions ‘Without Merit’
Crypto.com defines event contracts as “exchange-traded financial instruments, known as a derivative or swap, that facilitate risk allocation to specific outcomes of underlying future events.”
In its complaint, it said that any state action “pertaining to derivative contracts traded under the jurisdiction of the (Community Futures Trading Commission)” is without merit.
As for Maryland’s stance, Lottery and Gaming Control Commission Director John Martin said, “We view this as a legal matter and a consumer protection matter, and there is also a fiscal interest for the State. Each of Maryland’s legal sports wagering operators completed a rigorous licensing process and is subject to extensive regulations that include responsible gaming requirements.”
Martin added that because companies like Kalshi, Crypto.com, and Robinhood continue to operate without proper licensing, they are avoiding the same sports wagering taxes that legal operators pay to the state.
