Baltimore Sues Kalshi and Polymarket for Illegal Gambling, Misleading Customers

Baltimore has become the latest city to take direct legal action against the prediction market industry. Mayor Brandon M. Scott and the Baltimore City Council filed separate lawsuits against Kalshi and Polymarket on Thursday in the Circuit Court for Baltimore City, accusing both platforms of running illegal, unlicensed sports betting operations and misleading customers about the legality of their products.

The complaints allege that Kalshi and Polymarket violated Baltimore’s Consumer Protection Ordinance by offering “event contracts” on game winners, point spreads, point totals and player props — wagers the city says are functionally identical to the betting odds offered by licensed sportsbooks, just repackaged under a different label.

What Baltimore’s Lawsuits Actually Allege

According to the filings, neither Kalshi nor Polymarket holds a license from the Maryland Lottery and Gaming Control Agency, which the city says is required to legally offer sports wagering in the state. The lawsuits also claim both companies market their platforms in ways that create a false or misleading impression that their offerings are lawful and properly regulated, despite operating outside Maryland’s licensing framework entirely.

The Kalshi complaint goes further than the one against Polymarket, naming Robinhood, Webull and Coinbase as co-defendants. Baltimore alleges those three platforms distribute Kalshi’s event contracts directly through their own apps, letting users trade sports contracts without ever leaving Robinhood, Webull or Coinbase. The city also argues that “combo” contracts offered on Kalshi and Robinhood function just like parlays at a traditional sportsbook.

The Polymarket complaint takes a different angle, alleging the platform blurred the line between a prediction market and a sportsbook by running an internal market-making team capable of taking positions against its own users — meaning some customers may effectively be trading against the house rather than against one another.

“These companies are running sportsbooks without licenses and betting that a new label will put them above the law,” Scott said in a statement announcing the lawsuits. City Solicitor Ebony Thompson added that Kalshi and Polymarket “cannot circumvent Baltimore’s consumer protections by repackaging gambling as something else or claiming federal regulation puts them beyond the reach of our laws.”

Baltimore is seeking civil penalties of up to $1,000 per violation per day, along with injunctive relief, restitution for affected consumers and disgorgement of profits the city alleges were obtained unlawfully. The city also wants the court to block both platforms from accepting transactions from Baltimore residents entirely.

Part of a Much Bigger Legal Fight

Baltimore’s lawsuits add to a rapidly growing pile of legal challenges against prediction markets — now numbering more than 20 across the country. New York filed its own suit against Kalshi on July 31, seeking damages that could reach as high as $36 billion between forfeited profits, restitution and triple fines. Kentucky sued both Kalshi and Polymarket back in June, and Washington state won a preliminary injunction against Kalshi on July 21 after a judge found the state was likely to succeed in proving Kalshi’s contracts violate its gambling laws.

Maryland regulators had already issued Kalshi a cease-and-desist order in 2025 over its sports wagering contracts, a decision Kalshi is currently appealing to the Fourth Circuit. In response to Baltimore’s new filings, Kalshi called the lawsuits “political theater” and argued the city is simply trying to relitigate a case already under appeal. “Kalshi is not violating any consumer protection laws; it’s operating lawfully under the exclusive jurisdiction of its federal regulator,” the company said. Polymarket did not respond to requests for comment.

Kalshi’s core defense across every one of these cases rests on its designation as a CFTC-regulated exchange, which it argues preempts state and local gambling law entirely. Courts have been anything but consistent on that argument — the Third Circuit sided with Kalshi’s preemption theory in April, while a Manhattan federal judge rejected a similar injunction bid in July. With the Fourth Circuit now set to weigh in on Maryland’s underlying case, Baltimore’s lawsuits are effectively betting that a city-level consumer protection claim can succeed even while the bigger jurisdictional battle remains unresolved. For bettors watching the broader shift from traditional sportsbooks to prediction markets, this fight is likely to shape which platforms remain available for months to come.