Baltimore City officials have filed consumer protection lawsuits against Kalshi, Polymarket and affiliated companies, accusing the prediction-market platforms of running illegal, unlicensed sports-betting operations dressed up in new financial terminology. The complaints, filed in Circuit Court for Baltimore City, contend that the companies' so-called event contracts function as sports bets on game winners, point spreads, point totals, player statistics and other propositions.
According to WBFF, Mayor Brandon Scott filed the consumer protection actions alongside the Baltimore City Council, arguing that Kalshi and Polymarket violate the city's Consumer Protection Ordinance and constitute unlawful gambling under Maryland law. City Solicitor Ebony M. Thompson said the companies cannot circumvent Baltimore's consumer protections by repackaging gambling or claiming federal regulation puts them beyond local laws. Thompson, confirmed as Baltimore's top legal official in January 2024, has repeatedly leveraged the same municipal ordinance against major corporations, including a June lawsuit against marketing firm Agora Companies, according to Relman Colfax.
City Says Platforms Mislead Consumers About Legality
The lawsuits allege that Kalshi and Polymarket market their platforms in ways that create a false or misleading impression that their offerings are lawful and appropriately regulated, while offering moneyline-style wagers, point spreads, totals, tournament outcomes and player-performance propositions that resemble online sportsbooks. Baltimore officials accused the companies of misleading consumers about the legality and regulation of their products, and the city argues the conduct can expose young adults and people with gambling addictions to significant financial harm.
“These companies are running sportsbooks without licenses and betting that a new label will put them above the law,” Mayor Scott said, as detailed by WBFF. The city has said it will not let multibillion-dollar companies put profits over people and harm communities through illegal gambling, and it is seeking civil penalties, injunctive relief, restitution for affected consumers, disgorgement of ill-gotten profits and other relief authorized by law.
A Fight Already Playing Out in Federal Courts
Baltimore's case lands amid an escalating national clash over whether prediction markets are federally protected financial derivatives or unlicensed gambling subject to state and local control. A federal appeals split has emerged: in April, the U.S. Court of Appeals for the Third Circuit ruled 2-1 in KalshiEX LLC v. Flaherty that the Commodity Exchange Act preempts New Jersey's gambling laws for sports event contracts traded on CFTC-regulated exchanges, a decision detailed by law firm Holland & Knight.
Maryland's own federal courts have gone the other way. U.S. District Judge Adam B. Abelson denied Kalshi's request for a preliminary injunction against the Maryland Lottery and Gaming Control Commission last August, ruling that the Commodity Exchange Act does not preempt the state's gaming laws — a decision Kalshi has since appealed to the Fourth Circuit, per the Maryland Daily Record. Utah saw a similar outcome earlier this month, when U.S. District Judge Robert Shelby rejected Kalshi's bid to block the state from enforcing its anti-gambling laws, finding federal commodities legislation does not preempt Utah's ban on sports proposition wagers, according to the Associated Press.
Federal Regulator Steps in as New York Sues
The Baltimore filing comes just two days after CFTC Chairman Michael Selig invoked rare emergency authority to order Kalshi to keep operating in New York, even as New York Attorney General Letitia James pursues a $36 billion lawsuit alleging illegal gambling, CBS News reported. The CFTC has also sent prediction market operators, including Kalshi and Polymarket, a warning letter directing them to stop using traditional American-style moneyline odds, a move The Lines reports is meant to keep the platforms from looking too much like sportsbooks.
New York City has taken its own local approach: Council Speaker Julie Menin launched a municipal consumer protection investigation on Wednesday into Kalshi, Polymarket, Coinbase and Gemini over allegedly deceptive marketing aimed at young consumers, giving the platforms 14 days to explain youth ads. Attorney Adam Levitt said prediction market companies should not evade gambling laws by using new terminology and technology.
Money at Stake for Maryland's Public Schools
The financial stakes for Maryland are substantial. The state generated a record $1.637 billion in public contributions from regulated lottery, casino and sports wagering operations in Fiscal Year 2026, with licensed sports betting contributions jumping nearly 49% year-over-year to $132.3 million, according to Maryland Lottery and Gaming. More than $99.7 million of that sports wagering revenue went to public education, meaning every dollar wagered on an untaxed prediction platform is a dollar that never reaches that fund.
Kalshi and Polymarket compete with regulated sportsbooks while avoiding oversight, taxation, responsible-gambling requirements and consumer protections, the lawsuits allege, offering sports wagering to Baltimore residents without the licenses Maryland law requires. Polymarket's own regulatory history includes a $1.4 million CFTC penalty paid in January 2022 to settle charges of operating an unregistered options trading facility; the company operated largely offshore afterward before acquiring regulated exchange QCEX for $112 million in late 2025 to re-enter the U.S. market, per the Bitcoin Foundation.
Part of a Broader Pattern of Enforcement
Baltimore's action follows a wave of similar fights nationwide. Hoodline has previously reported on a 37-state blitz against Kalshi's sports offerings, a Manhattan judge siding with New York in a separate gambling showdown, Washington state's attorney general suing Kalshi over its betting app, and a Massachusetts court temporarily halting Kalshi's operations over unauthorized betting allegations. Maryland's own election chief has separately asked prosecutors to review Kalshi and Polymarket's election-related offerings.
Global trading volume on Kalshi and Polymarket combined climbed to roughly $24 billion a month as of April, surpassing the $14 billion monthly average generated by legal U.S. sportsbooks, according to Pew Research Center data cited by CBS News — up from under $5 billion in monthly volume in late 2025. That growth trajectory helps explain why cities like Baltimore are moving to intervene now, before more of that money flows around, rather than through, the state's regulated and taxed betting system.
