Baltimore sues Kalshi and Polymarket for allegedly violating consumer protection laws
Baltimore is suing prediction market operators Kalshi and Polymarket, accusing the companies of violating consumer protection laws.
Mayor Brandon Scott and the City Council filed the lawsuits Thursday against Kalshi, Polymarket and their affiliate companies.
The lawsuits accuse the companies of violating Baltimore's Consumer Protection Ordinance "by operating illegal, unlicensed sports-betting platforms and misleading consumers about the legality and regulatory status of their products," according to a release from the mayor's office.
"These companies are running sportsbooks without licenses and betting that a new label will put them above the law," Scott said in a statement. "It won't. Baltimore will not let multibillion-dollar companies put profits over people and harm our communities through illegal gambling."
The city is seeking civil penalties and restitution for affected consumers.
The claims against Kalshi and Polymarket
Prediction markets allow people to wager on sports, political elections and other major events. These companies say they differ from gambling operators, because users trade against other consumers, similar to how stock markets work.
Baltimore's lawsuits allege Kalshi and Polymarket offer the same betting services as tradition sportsbooks, like wagering on winners, point spreads, player statistics and more.
The companies describe these bets as "event contracts" or "prediction-market trades," which allows them "to compete with regulated sportsbooks while avoiding the oversight, taxation, responsible-gambling requirements, and consumer protections imposed on licensed operators," according to the release from the mayor's office.
The lawsuits also accuse the companies of misleading marketing practices, leading users to believe they are offering legal, regulated gambling services.
"This conduct can expose vulnerable populations, including young adults and people with gambling addictions, to significant financial harm," the release alleges.
Companies respond to lawsuits
"This is nothing more than an effort to relitigate the same case that's currently under appeal before the Fourth Circuit. It's clearly political theater by Mayor Scott," Kalshi told CBS News Baltimore in a statement Thursday. "Kalshi is not violating any consumer protection laws; it's operating lawfully under the exclusive jurisdiction of its federal regulator. We look forward to defending these claims in court."
"City-specific action runs counter to the CFTC's established framework for regulating prediction markets. As courts have recognized, prediction markets on CFTC-registered exchanges are governed by federal law, not a patchwork of state and local rules," Polymarket responded.
Prediction markets have skyrocketed in popularity in recent years. The combined monthly global trading volume on Kalshi and Polymarket soared from less than $5 billion in September 2025 to about $24 billion as of April 2026, according to the Pew Research Center.
By comparison, Americans bet an average of $14 billion per month on legal sports betting sites, the nonpartisan research firm found.
Legal battle over regulation
Baltimore joins a growing list of places suing prediction market operators. New York Attorney General Letitia James announced a similar suit last month, and the New York City Council is now investigating four companies, including Kalshi and Polymarket.
Meanwhile, there's a broader legal battle over whether states or the federal government should have regulatory control.
The Commodity Futures Trading Commission, the federal agency that oversees prediction markets, has filed lawsuits seeking to block states' efforts to increase regulation. The agency argues Congress has exclusive jurisdiction over derivative markets.
Attorneys, however, note it remains legally murky whether the CFTC's jurisdiction extends to sports betting, which drives much of the prediction markets, CBS News MoneyWatch reports.
