Baltimore Sues Kalshi and Polymarket Alleging Consumer Protection Violations Through Unlicensed Sports Betting Operations
TL;DR — Baltimore sued Kalshi and Polymarket for allegedly offering illegal sports bets labeled as event contracts, violating local consumer protection laws. Mayor Scott cited evasion of taxes and responsible gambling rules. Both operators assert CFTC federal preemption over patchwork local rules and dismiss the suit as political theater.
SCCG Take — This suit tests local authority against CFTC oversight of prediction markets, raising compliance risks and potential operational limits for the platforms in Maryland.
Baltimore has filed lawsuits against prediction market companies Kalshi and Polymarket. The city accuses the operators of violating consumer protection laws by running unlicensed sports betting platforms.
Mayor Brandon Scott and the Baltimore City Council filed the suits on Thursday. The complaints allege breaches of Baltimore’s Consumer Protection Ordinance through illegal operations and misleading consumers on legality and oversight. GamblingNews first detailed the action.
Allegations Center on Terminology and Oversight Gaps
The lawsuits claim Kalshi and Polymarket offer bets on game winners, point spreads, player statistics and other results. These resemble traditional sportsbook wagers but are labeled event contracts or prediction market trades. This approach lets the platforms avoid required taxes, responsible gambling rules and consumer safeguards.
Scott said that Kalshi and Polymarket were operating sportsbooks without licenses and attempting to avoid the law by using different terminology for their betting products. He added that Baltimore would not allow multibillion dollar companies to prioritize profits over people or harm communities through illegal gambling.
This action continues Baltimore’s earlier efforts. In March the city sued six sweepstakes casinos over claims of illegal gambling.
Kalshi and Polymarket Cite Federal Authority
Kalshi described the matter as an effort to relitigate the same case now on appeal before the Fourth Circuit. The company called it political theater by Scott. It said it was not violating any consumer protection laws and was operating lawfully under the exclusive jurisdiction of its federal regulator. Kalshi added that it looked forward to defending the claims in court.
Polymarket responded that city specific action was inconsistent with the Commodity Futures Trading Commission (CFTC)’s established regulatory framework for prediction markets. The company argued that as courts have recognized prediction markets operating on CFTC registered exchanges are subject to federal law rather than a patchwork of state and local regulations.
The two firms flagged 140 suspicious transactions potentially linked to insider trading so far this year.
Reporting: GamblingNews
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
Local enforcement collides with federal CFTC oversight — the outcome will define where prediction markets actually operate under law.
We've spent three decades navigating jurisdictional fights, and this is the sharpest yet: a city challenging federally-supervised operators over product classification. If Baltimore wins, prediction markets face state-by-state compliance nightmares. If the operators win, it's open season against municipal action — and every regulator will recalibrate.
- Baltimore alleges Kalshi and Polymarket run unlicensed sportsbooks disguised as event contracts
- Both platforms invoke CFTC federal preemption to dismiss city authority as invalid
- Outcome may force prediction markets into fragmented local licensing or shield them federally
SCCG angle: SCCG works both sides: we've placed compliance leaders inside prediction platforms and advised gaming regulators in 30+ jurisdictions. When the lines blur like this, our network connects operators to the legal, licensing, and lobbying firepower that turns ambiguity into strategy before the gavel drops.
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