Baltimore Sues Kalshi, Polymarket After Sportsbook, Sweepstakes Cases

Baltimore has expanded its increasingly aggressive approach to gambling enforcement to prediction markets. The city filed lawsuits against Kalshi and Polymarket after previously taking legal action against major sportsbooks and sweepstakes casino operators.

Mayor Brandon Scott and the City of Baltimore filed separate actions in Baltimore City Circuit Court on Aug. 13, accusing the prediction market operators of offering illegal sports wagering without the proper Maryland licenses.

The Kalshi lawsuit also names Robinhood, Webull and Coinbase, which offer Kalshi event contracts through their respective platforms.

Baltimore becomes the first U.S. municipality to sue prediction market operators. Detroit previously filed an amicus brief supporting Michigan regulators in Coinbase’s federal lawsuit.

Baltimore’s prediction market lawsuits are the latest development in the city’s campaign against online gambling businesses under its Consumer Protection Ordinance (CPO). The city first sued DraftKings and FanDuel in April 2025 over alleged predatory sportsbook practices. Then, in March, it targeted six sweepstakes casino operators.

Baltimore Calls Prediction Markets Unlicensed Sportsbooks

At the core of Baltimore’s lawsuits is the same question driving prediction-market litigation across the U.S.: whether sports event contracts are federally regulated derivatives or constitute illegal sports wagering under state law.

The Kalshi complaint says that sports-event contracts fall under Maryland’s definition of sports betting.

While Defendants call the Kalshi platform a ‘prediction market,’ the platform plainly facilitates ‘sports wagering’ as defined under Maryland law.”

The filing points out that Maryland has already determined that. The Maryland Lottery and Gaming Control Commission issued Kalshi a cease-and-desist letter in April 2025, as the regulator found that purchasing one of Kalshi’s sports contracts was “indistinguishable from the act of placing a sports wager.”

Kalshi then sued Maryland in federal court. The company argued that its contracts fall exclusively under the Commodity Exchange Act and Commodity Futures Trading Commission jurisdiction. A federal judge denied Kalshi’s request for a preliminary injunction in August 2025. The case is ongoing in the U.S. Court of Appeals for the Fourth Circuit.

Baltimore is pursuing a different route. It alleges the companies violated the city’s CPO by offering sports contracts while presenting them as lawful in Maryland.

The complaint accuses Kalshi, Robinhood, Webull and Coinbase of creating a “false, deceptive, and misleading impression” that their sports contracts can legally be traded in Maryland. It also notes the exchanges allow customers as young as 18, while Maryland sports wagering allows for individuals over 21.

The Polymarket complaint adds another consumer-protection argument, focusing extensively on the risks facing ordinary users.

It alleges the company failed to adequately disclose risks involving insider trading, manipulation and sophisticated professional traders. Baltimore also points to Polymarket’s moneylines, spreads, props, in-game markets and combos, along with its in-house market-making activity, to argue that the platform increasingly resembles a traditional sportsbook.

City Seeks Shutdown, Restitution and Disgorgement

Baltimore is asking the court to prohibit the prediction markets from offering unauthorized sports wagering within the city or accepting transactions from Baltimore residents.

It also seeks restitution for affected consumers, disgorgement of what it calls ill-gotten gains and the maximum statutory civil penalties available under the city’s CPO. Under the ordinance, each violation can carry a civil penalty of up to $1,000. Each day a violation continues is considered a separate offense.

Baltimore Expands Gambling Enforcement Campaign

The actions against prediction markets are Baltimore’s third attempt in less than 18 months to use its local consumer protection authority against gambling or gambling-adjacent companies.

In the sportsbook case, Baltimore did not allege that DraftKings and FanDuel were operating illegally, as both are licensed in Maryland. Instead, the city accused the operators of using misleading bonus offers, customer data, VIP programs and personalized inducements to identify and exploit customers exhibiting signs of problem gambling.

That case has yet to reach the merits. After the defendants removed it to federal court, a federal judge ordered it returned to state court in November 2025. However, DraftKings and FanDuel appealed the remand order to the Fourth Circuit. The state court proceedings have been paused while that appeal is pending.

Baltimore then turned to the sweepstakes casino sector in March. It sued VGW, B2Services, Yellow Social Interactive, Sweepsteaks Limited, High 5 Games and Blazesoft. That lawsuit alleges the operators disguise illegal online casino gambling as sweepstakes through dual-currency systems that allow customers to obtain redeemable virtual currency alongside purchases.

In the prediction market lawsuits, Baltimore is taking an approach similar to its sweepstakes cases. In both, the city is using its CPO to target products it alleges constitute illegal gambling despite being marketed under a different legal framework.

Baltimore’s CPO gives the City Solicitor authority to investigate alleged unfair, abusive or deceptive trade practices and seek injunctive relief and civil penalties.

Together with the sportsbook case, the lawsuits show Baltimore increasingly using its consumer-protection authority across the gambling industry. It has targeted licensed sportsbooks over how they treat customers and unlicensed sectors over both the legality and marketing of their products.