Baltimore Sues Kalshi, Polymarket Over Alleged Illegal Sports Betting

Baltimore has become the latest government entity to challenge prediction markets offering sports event contracts, filing lawsuits Thursday against Kalshi and Polymarket over allegations that the platforms are effectively operating unlicensed sportsbooks.

Baltimore Mayor Brandon Scott and the City Council filed separate consumer-protection actions in Baltimore City Circuit Court against the two prediction-market companies and affiliated entities.

The complaints allege the operators violated Baltimore’s Consumer Protection Ordinance by offering what city officials characterize as illegal sports wagering while misleading customers about the legality and regulatory status of their products.

Baltimore Targets Sports Event Contracts

At the heart of the dispute is the increasingly important question of whether sports event contracts constitute financial trading or traditional sports wagering.

Kalshi and Polymarket offer contracts tied to the outcomes of sporting events. Baltimore’s complaints argue that those markets closely resemble products found at conventional sportsbooks, allowing customers to take positions on game winners, point spreads, totals, player statistics, tournament results and other propositions.

The companies generally describe these products as event contracts or prediction-market trades rather than sports bets. Baltimore officials reject that distinction, arguing that changing the terminology doesn’t change the underlying nature of the transactions.

The city also alleges the platforms are competing with Maryland’s regulated sportsbooks without facing the same state licensing requirements, gaming taxes, responsible-gambling rules and consumer protections.

Baltimore is seeking civil penalties, restitution for affected consumers, disgorgement of allegedly improper profits, injunctive relief and other remedies available under the city’s Consumer Protection Ordinance.

Prediction Markets Face Growing Legal Battle

The Baltimore lawsuits are part of a much larger regulatory fight that has intensified as prediction markets have expanded their sports offerings.

Maryland has already been involved in litigation with Kalshi. State gaming officials previously sought to stop the company from offering sports event contracts without a Maryland sports wagering license, while Kalshi argued that its federally regulated contracts fall under federal commodities law rather than state gambling regulation.

Other states have taken similar action. New York recently sued Kalshi, alleging that the platform operates an illegal and unlicensed gambling business. Meanwhile, the Commodity Futures Trading Commission has increasingly become involved in litigation challenging state efforts to regulate prediction markets, setting up a broader dispute over federal versus state authority.

Kentucky has also sued Kalshi and Polymarket over allegations of illegal sports betting, while legal disputes involving prediction markets have emerged in numerous other jurisdictions.

Sports Betting Regulation at Center of Dispute

The outcome of these cases could have major implications for the U.S. sports betting industry. Licensed sportsbooks operate under state-by-state regulations that typically include minimum-age requirements, responsible-gambling programs, licensing fees and gaming taxes.

Baltimore argues that allowing prediction markets to offer essentially comparable sports products without those requirements gives them an unfair advantage and weakens protections intended for consumers. The city specifically raised concerns about young adults and people with gambling problems being exposed to financial harm.

Prediction-market operators, however, have generally maintained that federally regulated event contracts are fundamentally different from state-regulated sports wagers and fall under federal commodities jurisdiction.

That distinction is now becoming one of the most consequential legal questions facing the American wagering industry. With states, cities, federal regulators and prediction-market companies increasingly heading to court, the eventual outcome could determine whether sports prediction markets remain a nationwide alternative to conventional sportsbooks or become subject to the same state-by-state regulatory system.