Crypto.com sues Maryland regulator over sports event contracts
Crypto.com has filed a federal lawsuit against the Maryland Lottery and Gaming Control Commission (MLGCC), arguing that the state’s effort to block its sports event contracts is unconstitutional and conflicts with federal law. The case adds momentum to a growing wave of litigation by federally regulated prediction market platforms challenging state-level interference.
The lawsuit, filed on 21 April 2025 in the U.S. District Court for the District of Maryland by Crypto.com’s derivatives unit—North American Derivatives Exchange, Inc. (CDNA)—seeks a declaratory judgment and injunctive relief to stop the MLGCC from enforcing a cease-and-desist order it issued earlier this month. Maryland accuses the firm of offering illegal sports betting without a state license.
Crypto.com maintains it operates as a federally regulated Designated Contract Market (DCM) under the Commodity Futures Trading Commission (CFTC), and that its “sports event contracts” are lawful financial derivatives—not gambling products.
“The law is very clear for derivatives and prediction market event contracts,” said Nick Lundgren, Chief Legal Officer of Crypto.com. “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 recognised and upheld in our favour.”
Read more: Big win for Kalshi in court battle as judge blocks Nevada crackdown – SigmaPlay
Crypto.com cites Kalshi’s legal momentum
The lawsuit filed by Crypto.com draws extensively on Kalshi’s earlier success against the Nevada Gaming Control Board and anticipates that similar arguments would apply in Maryland.
Kalshi, on the other hand, secured a preliminary injunction against the New Jersey Division of Gaming Enforcement (NJDGE) on 28 April 2025. In that case, U.S. District Judge Edward Kiel found that sports event contracts fall under the exclusive regulatory authority of the CFTC—not state gambling agencies.
In his ruling, Judge Kiel rejected New Jersey’s claim that Kalshi’s contracts were unlicensed sports betting, stating, “I am persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction and am unconvinced by the defendant’s arguments to the contrary.”
Read more: Kalshi wins injunction against NJDGE in prediction market case – SigmaPlay
Crypto.com’s legal filing closely mirrors Kalshi’s strategy and builds on the same foundational argument: that Congress, through the Commodity Exchange Act (CEA), granted the CFTC exclusive jurisdiction over futures and derivatives trading, pre-empting any conflicting state law.
Maryland pushes back on federal pre-emption claims
The MLGCC, however, has framed the matter as one of consumer protection and fiscal integrity. Director John Martin stressed the need to hold all betting-related platforms to the same regulatory standards:
“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 said. He added that unlicensed operators “avoid the same sports wagering taxes that legal operators pay.”
The MLGCC’s cease-and-desist letter warned CDNA of civil and criminal penalties for continuing to allow Maryland residents access to its sports event contracts. Crypto.com’s filing contends that such enforcement would cause “irreparable harm,” including reputational damage, market disruption, and potentially violating the CFTC’s own impartial access rules.
Read more: Kalshi’s legal woes deepen as CFTC roundtable hangs in balance – SigmaPlay
Broader implications for prediction markets
Maryland is one of six states—along with New Jersey, Nevada, Illinois, Montana, and Ohio—that have taken regulatory action against platforms offering sports-based prediction contracts. Tennessee has expressed concerns but not yet issued formal orders.
Crypto.com’s case, combined with Kalshi’s wins in Nevada and New Jersey, is reshaping the national landscape for prediction markets. These platforms argue that their event-based contracts offer legitimate hedging and speculative tools—not gambling—and can serve the public interest through “truth-seeking” mechanisms.
Kalshi co-founder Tarek Mansour recently wrote on X (formerly Twitter), “We prevailed, got regulated, and made prediction markets legal in the US. But the fight wasn’t done. Our next step was the election market. After years of engaging with the CFTC, they rejected it. Again, we stayed true to our principle: instead of going around regulations or going offshore, we decided to ask Federal Courts to weigh in. The Courts sided with us because we were right on the law. We freed prediction markets, took them mainstream, and won big.”
With cases now pending in multiple jurisdictions—and conflicting views emerging between state and federal authorities—the courts may soon have to resolve whether prediction markets fall within financial regulation, gambling laws, or some new hybrid domain.
