A group of prediction market operators, including Kalshi, Crypto.com, Robinhood, and Coinbase, says states are working with casino lobby groups to stop them from offering event contracts.
The group, the Coalition for Prediction Markets, says the text of a Maryland gaming regulator-authored letter used language from a text drafted by casino lobbyists in an April 2025 appeal to the Commodity Futures Trading Commission (CFTC).
The Maryland letter called on the CFTC to block sports-related contracts on platforms like Kalshi and Polymarket.
But the media outlet Fox45 Baltimore reported that the American Gaming Association (AGA) provided Maryland with a draft letter eight days prior, featuring passages that are word-for-word identical in most parts.
The two letters are a “smoking gun,” the coalition’s CEO Sean Patrick Maloney told the same media outlet. He claimed regulators were “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,” Maloney said.
Casino Lobby Working With Multiple States, Says Coalition
The outlet added that it had seen documents proving that John Martin, the director of the Maryland Lottery and Gaming Control Agency, told colleagues about “possible action” through a “sample letter to be emailed to the CFTC commissioners.”
In the same email, Martin reportedly said the sample letter had been “provided by the […] AGA.”
In a letter to 20 state auditors and inspectors general, the coalition said Maryland regulators “may be working in coordination with the AGA, other states, and various undisclosed entities.”
The coalition suggested the parties were attempting to protect AGA members’ private interests by preventing prediction market firms from offering event contracts, Casino.org reported.
“We assume that these documents are but one example of a wider and more systemic scheme involving numerous participants,” the coalition wrote.
Struggle Intensifies
The development is yet another twist in the ongoing and increasingly bitter struggle between prediction market players and the CFTC on one hand, and state, tribal groups, and the casino industry on the other.
The CFTC says that only it has the power to police prediction market players. It refutes claims that Kalshi and similar platforms offer sports betting. Instead, it says the contracts traded on these platforms are swaps.
And it has so far hit nine states that have attempted to take matters into their own hands with lawsuits.
In recent days, the latter group appeared to score a victory when a Michigan judge temporarily banned Kalshi from offering sports-related contracts.
Kalshi says that it will comply with the order, but plans to launch a legal challenge. Legal experts say the case could well end up in the Supreme Court.
But the coalition, which formed in December last year, says it has further evidence of more recent collaboration between the AGA and state authorities.
In its most recent letter, the coalition said that at a June 25 hearing, a Utah counsel “represented to the court that he knew certain facts about Kalshi to be true because the AGA had informed him so.”
“This admission is significant,” said the coalition. “Because it appears to confirm that the AGA is orchestrating, or at a minimum coordinating, the broader, multi-state scheme that the Maryland emails reveal.”
Big Tech Makes Prediction Market Move
“This is a great example of the fox guarding the henhouse,” Maloney said.
He also accused “casino lobbyists” of “writing the official talking points and letters of Maryland state gaming officials.”
Further legal wrinkles could be ahead as big tech firms also look to move into the space.
Earlier this week, a report claimed Meta held takeover talks with Kalshi last year before eventually deciding to roll out its own AI-powered prediction market platform.
Meta has not yet made any official comment on the reports.
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