Baltimore is suing prediction market platforms Kalshi and Polymarket for offering sports betting without the licenses required by Maryland law. The city joins a wave of more than 20 lawsuits filed by states and local governments against these platforms, with some dating back to 2025 and 2026. The core legal question is whether these prediction markets are financial products or gambling, which determines who has the power to regulate them. Kalshi and Polymarket argue their event contracts are federally regulated financial products overseen by the CFTC, while states argue that sports bets remain gambling regardless of their structure. If courts rule in favor of the states, these platforms could be forced to obtain licenses state by state, a regulatory path that major sportsbooks spent years and hundreds of millions of dollars navigating since the federal sports betting ban was struck down in 2018.
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