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- Baltimore filed lawsuits against Kalshi and Polymarket under local consumer protection ordinances, alleging the platforms operate as illegal, unlicensed sportsbooks and bypass Maryland’s age and licensing requirements.
- New York City Council launched a formal probe into Kalshi, Polymarket, and crypto platforms regarding deceptive marketing and youth access, running parallel to over a dozen consumer class actions and an escalating circuit split over state regulatory authority.
Baltimore and New York City have opened new fronts against prediction market operators, with Baltimore suing Kalshi and Polymarket and New York City lawmakers investigating marketing practices at several related platforms.
The development matters because the claims described in the legal analysis do not depend on the still-unsettled federal preemption fight over sports-event contracts. Instead, they target consumer protection, advertising, age-verification, and disclosure practices that could affect operators and distribution partners even if federal courts eventually side with prediction market platforms on other issues.
Baltimore targets Kalshi, Polymarket, and distribution partners
According to the JD Supra article by Jeff Le Riche and Kip Randall, Baltimore Mayor Brandon M. Scott and the Baltimore City Council filed two lawsuits on Aug. 13, 2026 in the Circuit Court for Baltimore City. One suit targets Kalshi and its distribution partners, while the other targets Polymarket and its corporate entities.
The cases were brought under Baltimore’s Consumer Protection Ordinance, not Maryland’s gambling statute. Baltimore alleges the platforms let residents wager on game outcomes, point spreads, player statistics, and other propositions without the license required by the Maryland Lottery & Gaming Control Agency.
The Kalshi complaint focuses in part on alleged licensing and age-verification gaps, including claims that Kalshi allows users as young as 18 even though Maryland requires sports bettors to be at least 21. The Polymarket complaint alleges inadequate risk disclosure and says the platform’s growing product menu resembles a traditional sportsbook.
The Baltimore complaints seek injunctive relief, restitution, disgorgement of profits, and civil penalties of up to $1,000 per violation per day.
Kalshi said the lawsuits try to relitigate issues already on appeal before the Fourth Circuit and said it operates under the “exclusive jurisdiction of its federal regulator.” Polymarket said prediction markets on CFTC-registered exchanges are governed by federal law.
New York City probe and class actions widen the risk
On Aug. 12, 2026, New York City Council Speaker Julie Menin announced a formal investigation into the marketing and advertising practices of Kalshi, Polymarket, Coinbase, and Gemini’s Titan platform. The inquiry focuses on potentially deceptive trade practices, including how platforms acquire and retain users, including minors.
Menin sent letters with more than three dozen questions and gave each platform a 14-day deadline to respond. The investigation cited a Wall Street Journal analysis of more than 1,100 videos by Polymarket-affiliated creators that reportedly found about 70% showed trades on simulated websites without disclosing they were not real.
The Council said it plans to hold a public hearing and is considering whether legislation or other measures are needed.
The legal pressure also extends to private litigation. According to Bloomberg Law, consumers have filed more than a dozen class actions against Kalshi, Robinhood, Polymarket, and DraftKings since late 2025. The Kalshi cases have been consolidated in the Southern District of New York, while parallel Robinhood suits have been consolidated in the Northern District of California.
Why operators are watching the courts
The article says the Third Circuit sided with Kalshi on preemption in April 2026, but that the Ninth Circuit created a direct circuit split on Aug. 28, 2026 in _KalshiEX, LLC v. Assad_, holding that Kalshi’s sports-event contracts likely fall outside the statutory swap definition and that Nevada may enforce its gambling laws.
That split leaves the broader federal question unresolved. But the article’s central point is that municipal consumer-protection claims and private class actions can keep moving independently, especially where allegations center on marketing disclosures, insider-trading risks, margin practices, and age checks rather than the CFTC’s exclusive jurisdiction alone.
Source: As reported by Jeff Le Riche; Kip Randall.
