Key Takeaways
- The City of Baltimore initiated legal proceedings against Kalshi and Polymarket for allegedly conducting unlicensed sports wagering operations
- Coinbase, Robinhood, and Webull face allegations as co-defendants in the lawsuit targeting Kalshi
- Baltimore contends these platforms function as unregulated sportsbooks disguised as prediction markets
- The city demands financial penalties, customer compensation, and injunctive relief to halt operations
- This legal battle could trigger a jurisdictional showdown between municipal regulations and federal CFTC authority
On Thursday, Baltimore’s municipal government launched separate legal actions against prediction market operators Kalshi and Polymarket. The lawsuits, brought by Mayor Brandon Scott alongside the Baltimore City Council through Baltimore City Circuit Court, accuse both companies of providing unlicensed sports gambling services to city residents.
According to Baltimore’s legal filing, these platforms provide identical wagering opportunities found on regulated sports betting platformsācovering game outcomes, point differential bets, and individual athlete performance contractsāyet operate without obtaining mandatory state authorization, paying applicable taxes, or implementing required 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 complaint against Kalshi extends beyond the Polymarket action in scope. Baltimore specifically identified Robinhood, Webull, and [[LINK_START_0]]Coinbase[[LINK_END_0]] as additional defendants, asserting these financial platforms enable users to execute Kalshi sports-related contracts directly through their applications.
The legal filing encompasses eight separate charges related to deceptive and unfair business conduct. Additionally, the complaint asserts that combination wagers available through Kalshi and Robinhood operate identically to parlay betting options found on conventional 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.
Baltimore Claims Polymarket Trades Against User Positions
The complaint filed against Polymarket introduces an additional allegation. Baltimore asserts that the platform established its own market-making division capable of betting against user positions, potentially creating scenarios where customers unknowingly trade against the platform itself instead of other participants.
The municipal government further contends that Polymarket’s promotional materials created false impressions among users regarding the legality and regulatory compliance of its offerings.
“Kalshi and Polymarket cannot circumvent Baltimore’s consumer protections by repackaging gambling as something else,” City Solicitor Ebony Thompson said.
Polymarket countered by asserting federal jurisdiction supersedes local authority in this matter. “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 traded on prediction market platforms qualify as “swaps” subject to federal oversight. Baltimore’s legal actions fundamentally contest this interpretation.
Jurisdictional Conflict Between Federal and Municipal Powers
Legal analysts interpret this confrontation as representative of a broader regulatory struggle between state-level and federal authorities regarding prediction market oversight. Many observers anticipate this jurisdictional question will ultimately require Supreme Court intervention.
Baltimore’s lawsuits request maximum penalties allowed under statute, full restitution for impacted users, and forfeiture of revenue allegedly generated through illegal operations. The municipality additionally seeks court-ordered injunctions preventing these platforms from offering sports-related contracts to Baltimore residents.
As of Thursday, neither lawsuit has received scheduled hearing dates from the court.
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