Baltimore Sues Kalshi, Polymarket, Coinbase, Robinhood and Webull for Unlicensed Sports Betting — First Municipal Lawsuit Against Prediction Markets
Mayor Brandon Scott and the Baltimore City Council have sued Kalshi, Polymarket, and three distribution partners — Coinbase, Robinhood, and Webull — for operating unlicensed sports betting in violation of Baltimore's Consumer Protection Ordinance. The suits allege the platforms compete with regulated sportsbooks while avoiding Maryland's 15% gaming tax, state oversight, and responsible-gambling requirements including the 21+ age limit. Baltimore is the first municipality in the US to pursue legal action against prediction market platforms. The Kalshi complaint separately argues that 'combos' on Kalshi and Robinhood function as parlays equivalent to those offered by licensed sportsbooks.
Mayor Brandon Scott and the Baltimore City Council filed suits on August 13 in Baltimore City Circuit Court against Kalshi, Polymarket, Coinbase, Robinhood, and Webull, making Baltimore the first municipality in the United States to pursue legal action against prediction market platforms. The Kalshi complaint names four defendants: Kalshi itself plus Coinbase, Robinhood, and Webull, which distribute Kalshi's event contracts through prediction market sections built into their own apps. The Polymarket complaint names Polymarket directly. Both complaints allege violations of Baltimore's Consumer Protection Ordinance and include eight counts of deceptive and unfair trade. The city is seeking penalties, restitution, and an order blocking unauthorized sports betting. Baltimore says the platforms compete with regulated sportsbooks 'while avoiding the oversight, taxation, responsible-gambling requirements' that Maryland imposes on licensed operators.
The addition of Coinbase, Robinhood, and Webull as co-defendants is the most structurally significant element of the Kalshi complaint. Prediction market platforms have previously been sued as direct operators; Baltimore's suit targets the distribution layer simultaneously. Coinbase, Robinhood, and Webull each embed Kalshi's event contract markets inside their own trading apps, allowing users to access sports contracts without leaving platforms they use for equities, crypto, and ETFs. By naming them, Baltimore is asserting that companies that distribute prediction market sports contracts — rather than just those that list them — are liable for the resulting harm to licensed sportsbook operators and city residents. If that theory survives, it reaches every financial platform that has integrated prediction market functionality: a much broader defendant pool than the CFTC-licensed operators alone. The parlay argument adds a further layer: Baltimore's complaint specifically argues that 'combos' on Kalshi and Robinhood — multi-leg contracts that pay out only if all legs resolve correctly — function identically to parlays offered by licensed sportsbooks, which are a particularly profitable product category for operators and a particularly high-loss product for problem gamblers.
The age and responsible-gambling argument is where Baltimore's complaint is sharpest. Maryland's licensed sportsbooks require bettors to be 21 or older, consistent with most US state sports betting frameworks. Kalshi and Polymarket, as CFTC-regulated commodity exchanges, have an 18-year-old minimum — the standard for commodity trading accounts. An 18-year-old in Baltimore can open a Kalshi account and trade NFL game outcome contracts that a licensed Maryland sportsbook would legally refuse to accept. Baltimore's Consumer Protection Ordinance gives the city standing to sue on behalf of city residents harmed by deceptive trade practices, and the complaint frames the 21-to-18 age gap as a deception: users are not informed that they are in a less-regulated environment than a licensed sportsbook. The Kalshi complaint also alleges that Kalshi's marketing misleads users about its regulatory status — presenting CFTC licensing as equivalent to or stronger than state gaming oversight when the two regimes have different responsible-gambling obligations.
Baltimore's suit is filed in state circuit court, not federal court — a tactical choice that avoids the immediate federal preemption argument that has paralyzed most state-level litigation. Eleven states' worth of suits have been contested on CFTC preemption grounds, with courts splitting on whether federal DCM licensing displaces state gambling law. By filing in Baltimore City Circuit Court under a municipal consumer protection ordinance rather than state gambling law, Baltimore is attempting to frame the claim as a local consumer protection issue rather than a gambling regulation dispute. Whether a federal court accepts that reframing on removal — Kalshi and Polymarket will almost certainly remove to federal court — determines whether the consumer protection theory survives. The Fourth Circuit, which covers Maryland, has not yet ruled on a prediction market preemption question, making Baltimore a potential vehicle for establishing Fourth Circuit precedent alongside the Second, Third, and Sixth Circuit cases already in motion.
Operators mentioned in this article
Recent updates
Kalshi Suspends Congressional Candidate for Trading on Own Race — Senate Already Banned Members
Kalshi disclosed on August 31 that it suspended North Carolina congressional candidate Laurie Buckhout for three years and fined her $2,589 for trading on her own race — the first publicly known enforcement action against a candidate for prediction market insider trading. Kalshi said it found multiple politicians trading on races they were involved in, including former Congressman George Santos. The Senate had unanimously banned its members and staffers from prediction market trading on April 30. CNN published a major feature on September 24 documenting election officials' concerns about disinformation and insider trading risk from prediction markets as the midterms approach.
Pew Research: Prediction Market Volume Doubled May-July, Sports Now Largest Category
A Pew Research Center analysis published September 23 found that combined monthly trading volume on Kalshi and Polymarket more than doubled from May to July 2026 — rising from $26 billion in May to $53 billion in July — driven primarily by sports contracts. Sports is now the largest trading category on both platforms. During the FIFA World Cup in June and July, Kalshi's monthly sports volume reached $58 billion. Over the same period, Americans wagered roughly $40 billion at licensed sportsbooks — suggesting prediction market sports volume has approached or exceeded licensed sports betting in dollar terms.
Democrats Now 60% Senate, 90% House Favorites on Prediction Markets — Biggest Shift Since 2024
Prediction markets on Kalshi and Polymarket have moved decisively toward Democratic control of both congressional chambers in the 2026 midterms. Democrats are priced at approximately 60% to win Senate control (Republicans 40%) and roughly 90% to win House control as of September 21. Republicans had been at 80%+ in Senate control markets when the market opened in November 2024. The shift began in February 2026 following the Iran war and has accelerated through fall as rising gas prices pushed Trump's approval ratings lower. More than 500 active midterm markets are live across Kalshi and Polymarket combined.