Baltimore and its mayor, Brendan Scott, have filed lawsuits against Kalshi and Polymarket, alleging the companies violated local gambling laws.
In a notice published on Thursday, the Baltimore Mayor's Office stated that the two prediction market platforms operated as "illegal, unlicensed sports betting platforms" and misled users about "the legality and regulated status of their products." The lawsuits challenge Kalshi and Polymarket's interpretation of event contracts: according to the plaintiffs' arguments, such transactions constitute illegal wagers under state law.
"These companies are running sportsbooks without licenses and hoping a new label will put them above the law," Scott stated. "It won't. Baltimore will not allow multibillion-dollar companies to put profits over people and harm our communities through illegal gambling."
Baltimore's lawsuit against Kalshi lists Robinhood, Webull, and Coinbase as partners of the prediction market platform. The city accused all companies of unfair practices: they advertised sports contracts as instruments that could be "legally bought and sold in Maryland."
The legal action against the prediction market companies marks another conflict between state and federal authorities in the United States. Many experts expect the case to reach the Supreme Court. The U.S. Commodity Futures Trading Commission (CFTC), chaired by Michael Selig, and the companies have argued that event contracts on prediction markets constitute "swaps" falling under its regulatory purview. Baltimore's lawsuits, along with statements from other state authorities, challenge this assertion.
"Local-level actions contradict the established CFTC regulatory framework for prediction markets," a Polymarket representative stated in a comment to Cointelegraph regarding the lawsuit. "As courts have recognized, prediction markets on CFTC-registered exchanges are regulated by federal law, not a patchwork of state and local regulations."
Related: Court Stays CFTC Case Against US Service Member Over Prediction Market Bets
