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Baltimore just drew a hard line. The city filed lawsuits against prediction market platforms Kalshi and Polymarket, accusing both of running unlicensed sports-betting operations that violate Maryland law — and the complaint didn’t stop there.
Mayor Brendan Scott put his name on the action, framing it as a fight against large companies that, per the city’s argument, chose profits over community welfare. The core allegation is pretty direct: Kalshi and Polymarket have been selling and marketing event contracts to Maryland residents while misrepresenting whether those contracts are actually legal under state gambling rules. Baltimore says they’re not. The city calls them unlawful wagers, plain and simple, dressed up in financial-product language to dodge scrutiny.
Robinhood, Coinbase, and Webull Named as Partners
It’s not just Kalshi and Polymarket in the crosshairs. Robinhood, Webull, and Coinbase all got named in the complaints as partners with Kalshi. Baltimore’s argument is that these platforms helped market sports contracts as legally purchasable and tradable within the state — which, the city says, is deceptive. That’s a big deal. Pulling three of the most recognizable names in retail finance into a state gambling lawsuit gives the whole thing a different weight. It’s no longer a niche legal dispute about prediction markets. It’s a question about whether major financial apps bear responsibility for what they distribute and promote to their users.
None of the named companies have been shy about their federal-level arguments. Kalshi and Polymarket have both operated under the view that their products are federally regulated financial instruments, not state-level gambling products. That’s been their shield. Baltimore is trying to crack it.
CFTC vs. Maryland: A Jurisdictional Collision
The federal angle here is probably the most complicated part. The U.S. Commodity Futures Trading Commission, led by Chair Michael Selig, has taken the position that event contracts on these platforms qualify as “swaps” — which puts them squarely under federal jurisdiction, not state gambling law. A spokesperson from Polymarket pushed back on Baltimore’s move, arguing that city-specific legal actions directly contradict the CFTC’s regulatory framework, which governs prediction markets on federally registered exchanges.
So you’ve got a city saying: these are illegal bets. You’ve got a federal regulator saying: these are swaps, we handle this. And you’ve got prediction market companies caught in the middle, trying to figure out which legal framework actually applies to what they’re selling.
It’s murky. And it’s probably going to get messier before it gets cleaner.
The lawsuits may eventually reach the Supreme Court. Both sides seem dug in, and the jurisdictional question — who actually has authority over prediction markets, states or the federal government — isn’t one that resolves easily at a lower court level. There’s no clean precedent here. Prediction markets are still relatively new as a mass consumer product, and the legal infrastructure around them hasn’t caught up.
What’s at Stake for the Industry
Kalshi and Polymarket built their businesses on a federal interpretation of their contracts. That interpretation let them operate across state lines without seeking individual state gambling licenses. Baltimore’s lawsuit challenges that model at its foundation. If Maryland courts side with the city, it opens the door for other states to file similar actions — and suddenly the compliance map for prediction markets gets a lot more complicated.
The involvement of Robinhood, Webull, and Coinbase makes that scenario even harder to manage. These aren’t small distribution partners. They have millions of users. If courts decide that distributing Kalshi’s sports contracts through a brokerage app counts as facilitating unlicensed gambling, the liability questions get genuinely uncomfortable for those platforms.
It’s also worth noting that prediction markets have grown fast. What started as niche tools for political forecasting expanded hard into sports and financial events, attracting retail users who probably don’t think much about whether they’re using a CFTC-regulated swap or a state-regulated bet. That ambiguity, which seemed fine when the platforms were small, is now the center of a major legal fight.
Baltimore’s position is basically that the federal framing is a loophole, not a legitimate classification. Mayor Scott’s office seems ready to push that argument as far as it goes.
The Polymarket spokesperson’s rebuttal — that Baltimore’s action contradicts the CFTC framework — is the clearest signal yet that the companies plan to fight this on jurisdictional grounds rather than settle quietly. No timeline has been set for when the case might advance.
Frequently Asked Questions
Who did Baltimore name in its prediction market lawsuits?
Baltimore filed suits against Kalshi and Polymarket, and also named Robinhood, Webull, and Coinbase as partners with Kalshi accused of deceptive marketing practices.
What does the CFTC say about prediction market contracts?
CFTC Chair Michael Selig’s agency holds that event contracts on these platforms are “swaps” subject to federal regulation, a position Polymarket cited in pushing back against Baltimore’s lawsuit.
Why It Matters
This legal action highlights the increasing scrutiny on decentralized financial platforms and prediction markets, raising questions about regulatory compliance in an evolving landscape. As cities like Baltimore take a stand against perceived illegal operations, it underscores the potential implications for the broader crypto and fintech sectors, including major players like Robinhood and Coinbase, which may face reputational and operational risks as regulatory frameworks tighten. The outcome of this lawsuit could set a precedent for how prediction markets are regulated, influencing both market participation and innovation in the space.
