Baltimore sues Kalshi and Polymarket for unlicensed sports betting

Baltimore is suing prediction market platforms Kalshi and Polymarket, alleging both are offering sports betting without the licenses required under Maryland law. The city’s legal action adds to a pile of similar cases that has now surpassed 20 across the country.

The core question is deceptively simple: are prediction markets financial products or gambling? The answer determines who gets to regulate them.

The legal tsunami

Maryland regulators previously issued a cease-and-desist order to Kalshi over sports wagering back in 2025, which Kalshi is currently appealing.

New York filed a lawsuit against Kalshi on July 31, 2026, seeking to halt the platform’s operations entirely. The state is also pursuing profit forfeiture and fines that could reach three times whatever Kalshi earned from New York users.

Kentucky initiated lawsuits against both Kalshi and Polymarket in June 2026, making similar claims about illegal sports betting activities. Tennessee ordered Kalshi, Polymarket, and Crypto.com to cease operations involving sports contracts back in January 2026.

The federal vs. state jurisdiction standoff

Kalshi and Polymarket have consistently argued that their event contracts are federally regulated financial products overseen by the Commodity Futures Trading Commission. Kalshi won a landmark court battle against the CFTC itself in 2023, securing the right to list event contracts on elections.

The states contend that if a consumer can place a wager on whether the Ravens will cover the spread, it’s sports betting, and the fact that the bet is structured as a binary options contract traded on a CFTC-registered exchange doesn’t change its fundamental nature.

Polymarket’s particular exposure

Polymarket operates on the Polygon blockchain and already operates under restrictions. US users were technically barred from the platform following a 2022 settlement with the CFTC. The wave of state lawsuits now threatens to force the platform to implement more aggressive geoblocking or face mounting legal penalties.

What this means for prediction markets

If courts broadly rule that sports-related prediction contracts must comply with state gambling licensing requirements, obtaining licenses state by state is the exact regulatory gauntlet that major sportsbooks spent years and hundreds of millions of dollars navigating after the Supreme Court struck down the federal sports betting ban in 2018.

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