Baltimore officials have filed lawsuits against prediction market operators Kalshi and Polymarket, accusing the companies of offering sports betting products without the licenses required under Maryland law and misleading consumers about how their platforms are regulated.

The legal actions were submitted Thursday in Baltimore City Circuit Court by Mayor Brandon Scott and the Baltimore City Council. According to the complaints, both companies violated Baltimore’s Consumer Protection Ordinance by making sports-related contracts available to city residents while operating outside Maryland’s regulated sports wagering framework.

City officials argue that the products available through Kalshi and Polymarket closely resemble wagers offered by licensed sportsbooks. The complaints cite contracts tied to game winners, point spreads, point totals and player statistics, all of which are common features of traditional sports betting markets.

Baltimore maintains that labeling these products as prediction market trades or event contracts does not change their practical function.

“These companies are running sportsbooks without licenses and betting that a new label will put them above the law,” Scott said according to WBAL – TV. “It won’t. Baltimore will not let multibillion-dollar companies put profits over people and harm our communities through illegal gambling.”

City Says Platforms Bypass State Gambling Rules

The lawsuits allege that Kalshi and Polymarket have entered the sports wagering space without obtaining authorization from the Maryland Lottery and Gaming Control Agency. Baltimore contends that licensed operators must comply with extensive regulatory obligations, including oversight requirements, taxation rules and consumer protection standards.

According to the city, prediction market operators are competing with regulated sportsbooks while avoiding those obligations.

Court filings claim that both companies market their products in ways that create the impression that their offerings are lawful and subject to appropriate regulatory supervision. Officials argue that such representations may mislead customers regarding the legal status of the platforms.

The city also expressed concern about the impact on consumers, particularly individuals who may be vulnerable to gambling-related harms. In announcing the lawsuits, Baltimore stated that portraying the platforms as properly licensed and regulated could create risks for young adults and people displaying signs of problem gambling behavior.

“Kalshi and Polymarket cannot circumvent Baltimore’s consumer protections by repackaging gambling as something else or claiming federal regulation puts them beyond the reach of our laws,” said City Solicitor Ebony M. Thompson. “The City will continue to use its consumer protection authority to stop deceptive and unlawful conduct and hold companies accountable when they put our residents at risk.”

Adam Levitt, founding partner of law firm DiCello Levitt, echoed those concerns.

“Allowing prediction-market companies to evade gambling laws would set a dangerous precedent far beyond Baltimore,” Levitt said. “These companies cannot be permitted to use new terminology and new technology to operate outside the rules designed to protect consumers and communities.”

Kalshi Case Expands Beyond the Operator

While Baltimore filed separate complaints against each company, the lawsuit involving Kalshi includes additional defendants connected to the distribution of its contracts.

The city named Kalshi Inc. and KalshiEX LLC alongside Robinhood Markets, Robinhood Derivatives, Webull Corporation, Webull Financial and Coinbase Financial Markets. Baltimore alleges that users can access and trade Kalshi sports contracts directly through prediction market sections within those platforms.

The complaint includes multiple allegations of deceptive and unfair trade practices. Baltimore also argues that certain bundled offerings, described as “combos,” operate similarly to parlay wagers commonly available through sportsbooks.

Kalshi rejected the city’s claims and pointed to its federal regulatory status.

“This is nothing more than an effort to relitigate the same case that’s currently under appeal before the Fourth Circuit. It’s clearly political theater by Mayor Scott. Kalshi is not violating any consumer protection laws; it’s operating lawfully under the exclusive jurisdiction of its federal regulator. We look forward to defending these claims in court.”

Dispute Reflects Broader Regulatory Debate

Baltimore’s complaint against Polymarket names QCX LLC, Blockratize Inc. and QC Tech LLC. The city alleges that Polymarket has blurred the distinction between a prediction market and a sportsbook through aspects of its operating model.

According to the lawsuit, Polymarket maintains an internal market-making operation capable of taking positions opposite customers. Baltimore argues that this arrangement means users may, in some situations, be trading against the platform itself rather than exclusively against other participants.

The city also alleges that Polymarket’s marketing materials contribute to a misleading perception regarding the legality and regulation of its products.

A Polymarket representative pushed back against Baltimore’s position.

“City-specific action runs counter to the (Commodity Futures Trading Commission’s) established framework for regulating prediction markets. As courts have recognized, prediction markets on CFTC-registered exchanges are governed by federal law, not a patchwork of state and local rules.”

The dispute arrives as prediction market operators continue to face scrutiny from state authorities. Last December, Maryland Lottery and Gaming Control Commission Secretary John Martin warned licensed gaming companies about entering the prediction market sector, noting that participation could place gaming licenses at risk.

Recent court rulings have also favored state regulators in several jurisdictions. Decisions in New York, Wisconsin and Utah denied requests from prediction market companies seeking injunctions that would have limited enforcement actions by local authorities.

Baltimore is seeking several forms of relief through the lawsuits, including civil penalties, restitution for affected consumers, disgorgement of allegedly unlawful proceeds and injunctive orders. The city also wants the court to prohibit Kalshi and Polymarket from offering what it describes as unauthorized sports betting products to Baltimore residents.