Baltimore has filed lawsuits against Kalshi and Polymarket, claiming the platforms violated local consumer protection laws by offering unlicensed sports betting. The case highlights ongoing disputes over prediction markets and regulatory oversight
The City of Baltimore has initiated legal action against prediction market operators Kalshi and Polymarket, alleging that both companies have been running unlicensed sports betting platforms in violation of local consumer protection laws. The lawsuits, filed by Mayor Brandon Scott and the Baltimore City Council, mark the latest escalation in a series of regulatory and legal challenges facing event contract platforms in the United States.
Details of the Lawsuit
According to the official complaint, Baltimore accuses Kalshi and Polymarket of operating illegal gambling services by offering betting options on sports outcomes without the required state or city licenses. The city claims these platforms allow users to wager on game results, point spreads, player statistics, and other sports-related events, mirroring the offerings of regulated sportsbooks. The lawsuit further alleges that both companies misled consumers about the legality and regulatory status of their products, potentially exposing users to unregulated gambling risks.
Operator Responses and Regulatory Dispute
Both Kalshi and Polymarket have publicly disputed Baltimore's claims. Kalshi argues that the lawsuit is an attempt to revisit issues already under appeal in federal court, maintaining that its operations are lawful and fall under the exclusive jurisdiction of its federal regulator, the Commodity Futures Trading Commission (CFTC). Polymarket similarly contends that city-level enforcement is inconsistent with the CFTC's regulatory framework, emphasizing that prediction markets registered with the CFTC are subject to federal, not local, oversight. Both companies have stated their intention to defend themselves in court.
Broader Legal Context and Recent Actions
This legal action follows a broader trend of state and local governments scrutinizing event contract and prediction market platforms. Earlier in 2026, Baltimore filed a separate lawsuit against several sweepstakes casinos, alleging illegal online gambling activity. Meanwhile, Kalshi and Polymarket have reported flagging over 140 suspicious transactions this year, highlighting ongoing concerns about market integrity and compliance. The outcome of Baltimore's lawsuits could influence how prediction markets are regulated at both the state and federal levels, especially as more jurisdictions examine the distinction between event contracts and traditional sports betting.
Understanding the difference between event contracts and sportsbook wagers is central to this dispute. Event contracts, as offered by platforms like Kalshi and Polymarket, are typically structured as peer-to-peer trades on the outcome of real-world events, including sports. In contrast, traditional sportsbooks set odds and act as the house, taking bets directly from players. The regulatory status of event contracts remains a contested issue, with the CFTC overseeing certain types of prediction markets at the federal level, while states retain authority over gambling and sports betting. The resolution of these lawsuits may clarify how these products are treated under U.S. law and what protections apply to consumers.
