Prediction market companies like Kalshi and Polymarket have long been in legal disputes with various states and cities. Recently, this number has grown, as Baltimore, Maryland, has filed a lawsuit against both entities, accusing them of breaching consumer protection laws and offering illegal sports betting.
Baltimore Filed Lawsuit Against Kalshi and Polymarket
Mayor Brandon Scott and the Baltimore City Council filed lawsuits Thursday against Kalshi, Polymarket and their affiliated companies. According to a release from the mayor’s office, the lawsuits allege that the companies violated Baltimore’s Consumer Protection Ordinance by operating illegal, unlicensed sports-betting platforms and misleading consumers about the legality and regulatory status of their products.
The lawsuit alleges that Kalshi and Polymarket provide betting options similar to those offered by traditional sportsbooks, including wagers on game winners, point spreads, player statistics and other outcomes. The companies refer to these wagers as “event contracts” or “prediction-market trades,” which the mayor’s office says allows them to compete with regulated sportsbooks without being subject to the same oversight, taxes, responsible-gambling requirements and consumer protections.
In a press release, Mayor 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 isn’t the first major gambling-related legal battle that Baltimore has commenced this year. In March, the city filed a lawsuit against six sweepstakes casinos, alleging they offered casino-style games to residents even though online casino gambling is illegal in Maryland.
Kalshi and Polymarket Respond to the Allegations
Previously, both Kalshi and Polymarket have argued that event contracts traded on peer-to-peer prediction markets differ from the house-set odds offered by traditional sports betting platforms. Other jurisdictions have also filed lawsuits against the operators, alleging exactly what Kalshi and Polymarket are arguing against. When Baltimore filed its lawsuit against the companies, both companies issued independent responses quickly.
According to Kalshi, the matter is an effort to relitigate the same case currently under appeal before the Fourth Circuit, calling it “political theater” by Mayor Scott. The company 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.
Meanwhile, 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.
In other news about Kalshi and Polymarket, so far this year, the companies flagged 140 suspicious transactions potentially linked to insider trading.