Baltimore sues prediction markets as 4th Circuit weighs state case

Baltimore sued prediction markets Polymarket and Kalshi in separate lawsuits alleging the platforms’ sports betting features violate the city’s consumer protection ordinance.

Filed Thursday in Baltimore City Circuit Court, the lawsuits accuse the prediction markets of engaging in misleading and unfair trade practices. The suit against Kalshi also targets three other firms — Robinhood, Webull and Coinbase — that have partnered with the prediction market on sports wagering.

The complaints say the prediction markets are misleading Baltimore consumers by failing to warn users of the extent of insider trading and manipulation that could affect contract outcomes. They also say the platforms deceptively give the impression that the sports wagers they offer are lawful in the city, despite neither of the platforms being licensed by the Maryland Lottery & Gaming Control Agency as a sports betting contractor.

Last year, Kalshi sued the state gambling regulator, which issued a cease-and-desist order and said its events contracts were “indistinguishable” from sports bets.

Even though most of its business involves users winning or losing money based on the outcomes of sporting events, Kalshi considers itself a “prediction market,” not a sportsbook. Because users purchase “event contracts” rather than placing traditional bets, the company argues it can only be regulated by the federal Commodity Futures Trading Commission and is not subject to licensure by state gambling authorities.

Last August, a federal judge allowed the Maryland gaming agency to regulate Kalshi, denying the company’s request for a preliminary injunction. But the commission agreed not to enforce its licensing rules during Kalshi’s appeal to the U.S. Court of Appeals for the Fourth Circuit. That appeal is still awaiting a decision.

By operating outside Maryland’s licensing framework, the markets have an unfair competitive advantage over licensed sportsbooks, Baltimore City’s lawsuits allege. For example, the minimum age to use Kalshi and Polymarket is 18, while Maryland requires sports bettors to be 21 or older.

The city is seeking an injunction stopping the prediction markets from “operating their unauthorized sports wagering platforms in the City of Baltimore and prohibiting them from accepting transactions from Baltimore residents.” It also seeks civil penalties of up to $1,000 per violation of the consumer protection ordinance per day.

In a statement, Kalshi said that the new lawsuits were “clearly political theater by Mayor (Brandon) Scott.”

“This is nothing more than an effort to relitigate the same case that’s currently under appeal before the Fourth Circuit,” the company said. “Kalshi is not violating any consumer protection laws; it’s operating lawfully under the exclusive jurisdiction of its federal regulator.” The prediction market firm said it looks “forward to defending these claims in court.”

Polymarket didn’t respond to a request for comment.

Crypto.com, which also operates a prediction market, sued the state after receiving a similar cease-and-desist order as Kalshi; that case is paused pending the outcome of Kalshi’s appeal.

In the lawsuits against Kalshi and Polymarket, the city’s law department is working alongside a team of attorneys from the national mass tort law firm DiCello Levitt. The same firm is also representing the city in its lawsuit against licensed sports betting operators DraftKings and FanDuel, which the city alleges target and exploit problem gamblers through their respective mobile apps. DiCello Levitt is also serving as outside counsel for the city in its litigation against online sweepstakes casinos, tobacco company Philip Morris International, Elon Musk’s xAI, as well as the owner and manager of the ship that hit the Francis Scott Key Bridge.

The prediction market actions are the second and third consumer protection lawsuits filed by the city this week. On Monday, the city sued a group of local landlords, alleging that they operate unlicensed rentals with unsanitary living conditions.

This story has been updated.