USA13 August, 20262 min read
Baltimore Sues Kalshi And Polymarket, Accusing Illegal Unlicensed Sports Betting
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Baltimore sues Kalshi and Polymarket alleging illegal unlicensed sports betting under local consumer protection laws. Lawsuits filed in Baltimore City Circuit Court by Mayor Scott and City Council.
Baltimore sues Kalshi, Polymarket
Baltimore Mayor Brandon Scott and the City Council filed lawsuits in Baltimore City Circuit Court against prediction-market operators Kalshi and Polymarket and their affiliated companies, accusing them of violating Baltimore’s Consumer Protection Ordinance. The city alleges the companies operate “illegal, unlicensed sports-betting platforms” and mislead consumers about the “legality and regulatory status of their products,” while offering wagers on game winners, point spreads, point totals, player statistics, and other propositions.
In a statement, Scott said, “These companies are running sportsbooks without licenses and betting that a new label will put them above the law,” and added, “It won’t.” The lawsuits ask a judge to stop the companies from accepting transactions from city residents and to order civil penalties, restitution for customers, and the return of profits earned through the alleged violations.
Federal vs state authority
Kalshi and Polymarket dispute Baltimore’s authority, with a Polymarket spokesperson saying, “City-specific action runs counter to the CFTC’s established framework for regulating prediction markets.” The Polymarket spokesperson added that, “prediction markets on CFTC-registered exchanges are governed by federal law, not a patchwork of state and local rules.”
Kalshi also disputed the city’s claims, saying it is federally regulated and complies with consumer protection laws, and a Kalshi spokesperson told CBS News Baltimore that “Kalshi is not violating any consumer protection laws; it’s operating lawfully under the exclusive jurisdiction of its federal regulator.” Baltimore’s complaint frames the dispute as a practical fight over who can regulate the platforms, alleging that the companies’ trades function as sports bets under Maryland law even though they label them “event contracts” or “prediction-market trades.”
What’s at stake next
Baltimore’s legal team seeks civil penalties, injunctive relief, restitution for affected consumers, and disgorgement of ill-gotten profits, asserting that the companies’ marketing creates a false impression that their offerings are lawful and appropriately regulated.
The city’s complaint also alleges that the companies compete with regulated sportsbooks while avoiding oversight, taxation, responsible-gambling requirements, and consumer protections imposed on licensed operators.
Kalshi and Polymarket’s defense centers on the idea that their platforms are governed by federal oversight, and Polymarket’s spokesperson told Cointelegraph that “prediction markets on CFTC-registered exchanges are governed by federal law, not a patchwork of state and local rules.”
The lawsuits arrive as a federal appeals court is considering whether Maryland can regulate prediction markets, with the 4th U.S. Circuit Court of Appeals having heard arguments in May and not ruled as of Aug. 13, according to The Derrick.