TLDR
- Baltimore filed lawsuits against prediction market platforms Kalshi and Polymarket, alleging illegal sports betting
- Coinbase, Robinhood, and Webull were named as co-defendants in the Kalshi case
- The city claims the platforms operate unlicensed sportsbooks under a different label
- Baltimore is seeking penalties, restitution, and a court order to block the platforms
- The case sets up a potential conflict between local laws and federal CFTC oversight
The City of Baltimore filed lawsuits Thursday against prediction market platforms Kalshi and Polymarket. Mayor Brandon Scott and the Baltimore City Council brought the cases in Baltimore City Circuit Court, alleging the companies offered illegal, unlicensed sports betting to residents.
does this idiot not know kalshi is already in litigation against maryland?
— Christopher (@christopher7167) August 13, 2026
The city says both platforms offer the same types of wagers as licensed sportsbooks, including game winners, point spreads, and player performance contracts, but without the required state licenses, taxation, or consumer protections.
“These companies are running sportsbooks without licenses and betting that a new label will put them above the law,” Mayor Scott said. “It won’t.”
The Kalshi case goes further than the Polymarket suit. Baltimore named Robinhood, Webull, and Coinbase as co-defendants, claiming these platforms let users trade Kalshi sports contracts directly inside their own apps.
The complaint includes eight counts of deceptive and unfair trade practices. It also argues that combo bets offered on Kalshi and Robinhood function like parlays on traditional sportsbooks.
Kalshi pushed back, defending its federal regulatory standing. “Kalshi spent years getting regulated by the federal government and abides by all applicable regulations,” a company spokesperson said.
Polymarket Accused of Trading Against Its Own Users
The Polymarket lawsuit raises a separate concern. Baltimore alleges the platform set up an internal market-making team that could take positions against its own users, meaning customers may sometimes be trading against the house rather than each other.
The city also claims Polymarket’s marketing gave users the misleading impression that its products are legal and fully regulated.
“Kalshi and Polymarket cannot circumvent Baltimore’s consumer protections by repackaging gambling as something else,” City Solicitor Ebony Thompson said.
Polymarket responded by arguing the case should fall under federal, not local, law. “Prediction markets on CFTC-registered exchanges are governed by federal law, not a patchwork of state and local rules,” a Polymarket spokesperson said.
The US Commodity Futures Trading Commission has taken the position that event contracts on prediction markets are “swaps” and fall under its federal authority. Baltimore’s lawsuits directly challenge that view.
Federal vs. Local Authority
Legal experts see this dispute as part of a wider clash between state and federal regulators over who controls prediction markets. Many expect the conflict to eventually reach the Supreme Court.
Baltimore is seeking maximum statutory penalties, restitution for affected users, and disgorgement of proceeds it says were obtained unlawfully. The city also wants a court order blocking the platforms from offering sports contracts to Baltimore residents.
No court dates have been set in either case as of Thursday.
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