The battle between state regulators and prediction markets continue to expand daily. The next big case occurring is happening in Maryland.
Maryland's top election official is asking the state's prosecutor to investigate whether election prediction markets offered by platforms like Kalshi and Polymarket violate state law. The request marks another attempt by a state government to push back against the rapidly expanding prediction market industry, which has spent much of 2026 fighting legal battles across the country.
The Same Storyline for Prediction Markets
Over the past several months, states including Washington, Massachusetts, Nevada, and others have challenged whether federally regulated event contracts should be allowed. Maryland now joins that growing list, but this dispute centers around elections and not sports contracts like usual.
Maryland election officials argue that state law prohibits wagering on political races and believe these contracts do fall under the gambling category. Meanwhile, prediction markets continue to maintain that users aren't placing bets, but forecasting future options.
The inevitable ruling comes by the Supreme Court on this argument is the time when most legal battles will die for prediction markets. However, we have no timeline on when this will happen.
Kalshi has consistently argued that its contracts fall under the authority of the Commodity Futures Trading Commission rather than individual state gaming regulators. Court victories over the past two years have helped strengthen that position, but states continue searching for new legal avenues to challenge the company's offerings.
Midterms are Approaching
With the 2026 midterm elections approaching, political prediction markets have become increasingly active. Traders can buy contracts on everything from congressional control to gubernatorial races, creating live estimates on what will happen in each race.
Kalshi recently expanded those offerings by launching a dedicated election forecasting hub that combines market pricing with polling and campaign data, signaling that political markets remain a major focus for the company despite ongoing legal challenges.
It’s also a way of Kalshi saying that these contracts aren’t gambling, but a tool to forecast the market.
Supporters argue that prediction markets often react faster than traditional polling because participants have money on the line. Rather than simply answering survey questions, traders are financially incentivized to evaluate new information as quickly and accurately as possible.
Critics, however, see something different. Election officials and some lawmakers worry that allowing people to profit from political outcomes could undermine confidence in elections or create incentives for manipulation. The best and most impactful ones which sway the market would typically have varying levels of inside information.
Those concerns have fueled increased calls for tighter oversight, and this is why Maryland is trying to stop political contracts on prediction markets. Whether those arguments ultimately hold up in court remains to be seen.
The Trade Handle Prediction Markets Take
Nearly every month seems to bring another lawsuit, regulatory challenge, or policy debate involving prediction markets. This is coinciding with massive growth on those prediction markets like Kalshi and Polymarket.
Maryland's request is simply the latest challenge which will inevitably end up in the Supreme Court down the road. This is nothing new for prediction markets as they battle every day to stay relevant by fighting in court.
Until those legal questions receive more definitive answers, traders should have no concern of placing their money into exchanges. The legal battles have come, but prediction markets haven’t skipped a beat. The same will likely be true for election markets in Maryland.