Baltimore Sues Kalshi, Polymarket Over Alleged Unlicensed Sports Betting

Baltimore has sued prediction-market platforms Kalshi and Polymarket, alleging they violated local gambling laws.

Cointelegraph reported on Aug. 13 that the city of Baltimore and Mayor Brandon Scott accused Kalshi and Polymarket of operating “unlicensed illegal sports betting platforms” and misleading users about the legality of their services and regulatory status.

“These companies think they can operate sportsbooks without licenses and somehow stand above the law by calling them something new,” Scott said. “Baltimore will not tolerate multibillion-dollar companies harming our communities through illegal gambling.”

At the center of the lawsuit is the legal status of the event contracts offered by the two platforms. Baltimore argues the trades constitute illegal gambling under state law and says the companies marketed them as if they were lawful products. Robinhood, Webull and Coinbase were also named as defendants in the complaint against Kalshi because of their partnerships with the platform.

A Polymarket spokesperson told Cointelegraph that a unilateral action by one city conflicts with the Commodity Futures Trading Commission’s existing regulatory framework for prediction markets. Courts have recognized that prediction markets operated by CFTC-registered exchanges are governed by federal law rather than state or local rules, the spokesperson added.

The lawsuit marks the latest clash over whether federal or state authorities have jurisdiction over prediction markets in the US. Some lawyers believe the dispute could ultimately reach the US Supreme Court. The CFTC has maintained that event contracts in prediction markets fall within its jurisdiction as swaps.