Baltimore Sues Polymarket and Kalshi for Operating Unlicensed Sportsbooks

Baltimore has taken legal action against prediction market operators Kalshi and Polymarket, accusing both companies of operating unlicensed sportsbooks within the city. The lawsuit was filed by Mayor Brandon Scott and the City Council on Thursday in the Circuit Court for Baltimore City.

The city claims that both platforms allow residents to place bets on various sports outcomes, including game winners, point spreads, and player statistics. While the companies refer to these as event contracts, Baltimore argues they function as illegal sports bets under Maryland law.

The lawsuit highlights that the absence of proper licenses exempts both firms from tax obligations, audits, and player protection regulations that licensed sportsbooks must adhere to. Furthermore, the city alleges that the platforms mislead consumers into believing their offerings are lawful and regulated, potentially attracting inexperienced bettors and problem gamblers.

“These companies are running sportsbooks without licenses and betting that a new label will put them above the law. It won’t,” Mayor Scott stated. The city is seeking an injunction to prevent both platforms from conducting transactions with residents, alongside civil penalties of up to $1,000 per violation per day, restitution for affected consumers, and the disgorgement of profits.

This lawsuit adds to a growing trend of jurisdictions challenging prediction markets. In recent months, similar legal actions have been initiated in Kentucky, Wisconsin, and Nevada, with New York City also probing these platforms.

In addition to the legal troubles, Polymarket has faced challenges in maintaining banking relationships. JPMorgan ended its banking relationship with the platform last year due to regulatory concerns, although it has retained some connections, such as inviting Polymarket's CEO to a conference.