Baltimore sues Kalshi and Polymarket over sports-betting event contracts

The City of Baltimore and Mayor Brendan Scott have filed lawsuits against Kalshi and Polymarket, accusing both prediction market firms of running “illegal, unlicensed sports-betting platforms” under local gambling laws. For PSPs and partners in high-risk verticals, the useful part is simple: this is another US state-versus-federal fight over whether event contracts are wagers or regulated financial products.

1. The Baltimore mayor’s office said in a Thursday notice that Kalshi and Polymarket misled users about the “legality and regulatory status of their products.” The city’s complaint says the companies’ event contracts are, in substance, unlawful wagers under state law rather than legitimate trades.
2. Mayor Brendan Scott framed the case as a licensing issue, saying: “These companies are running sportsbooks without licenses and betting that a new label will put them above the law,” and adding that Baltimore “will not let multibillion-dollar companies put profits over people and harm our communities through illegal gambling.”
3. Baltimore’s complaint against Kalshi also named Robinhood, Webull and Coinbase as partners with the prediction market platform. The city accused all of them of deceptive practices for marketing sports contracts as something that can “lawfully be purchased and traded in Maryland.”
4. The broader dispute sits in the middle of an ongoing clash between US state and federal authorities. The US Commodity Futures Trading Commission (CFTC), under Chair Michael Selig, and the companies have argued that event contracts on prediction markets are “swaps” within the CFTC’s remit, while Baltimore and other state-level authorities say they are not.
5. Polymarket pushed back by saying, “City-specific action runs counter to the CFTC’s established framework for regulating prediction markets,” and argued that prediction markets on CFTC-registered exchanges are governed by federal law, not “a patchwork of state and local rules.” Many legal observers expect the fight to end up at the Supreme Court.