TLDR
- The City of Baltimore initiated legal proceedings against prediction market operators Kalshi and Polymarket, accusing them of running illegal sports wagering operations
- Trading platforms Coinbase, Robinhood, and Webull face inclusion as co-defendants in the lawsuit targeting Kalshi
- Baltimore argues these platforms function as unlicensed sports betting operations disguised under alternative branding
- The city pursues financial penalties, user compensation, and injunctive relief to halt platform operations
- This legal action creates a jurisdictional showdown between municipal regulations and federal CFTC authority
On Thursday, Baltimore officials initiated legal proceedings against two prominent prediction market operators, Kalshi and Polymarket. The lawsuits, brought by Mayor Brandon Scott alongside the Baltimore City Council through Baltimore City Circuit Court, contend that both companies have been facilitating unlicensed sports wagering for city residents.
According to municipal authorities, these platforms provide wagering opportunities identical to those found on state-licensed sportsbooksâincluding bets on game outcomes, point spreads, and individual player statisticsâwhile operating without proper state licensing, tax compliance, or mandated consumer safeguards.
“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 legal action against Kalshi extends beyond the Polymarket complaint in scope. Baltimore has identified Robinhood, Webull, and Coinbase as additional defendants, asserting these trading platforms enable their users to access and trade Kalshi sports-related contracts through integrated functionality within their applications.
The filing presents eight separate allegations of deceptive and unfair business practices. Baltimore’s complaint further contends that combination wagering options available through Kalshi and Robinhood mirror the parlay betting structures found on conventional sports gambling platforms.
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 complaint filed against Polymarket introduces an additional allegation. Baltimore contends the platform established an in-house market-making operation capable of taking trading positions opposite to its user base, suggesting participants may unknowingly trade against the platform itself rather than exclusively with other users.
The municipality further asserts that Polymarket’s promotional materials created a false impression among users that its offerings operate within legal boundaries and meet regulatory standards.
“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 maintains that event-based contracts offered on prediction market platforms qualify as “swaps” subject to federal regulatory jurisdiction. Baltimore’s legal challenge directly contests this classification.
Federal vs. Local Authority
Legal analysts view this confrontation as one component of a broader jurisdictional battle between state-level and federal regulators concerning oversight of prediction market platforms. Industry observers widely anticipate this regulatory conflict will ultimately require Supreme Court intervention.
Baltimore’s legal demands include maximum statutory financial penalties, compensation for impacted users, and forfeiture of revenues the city characterizes as illegally obtained. Additionally, the municipality seeks judicial orders preventing these platforms from offering sports-related contracts to Baltimore residents.
As of Thursday, neither lawsuit has received scheduled court hearing dates.
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