Baltimore sues Kalshi and Polymarket, and three of Kalshi's brokers

What happened

The City of Baltimore filed two complaints in the Circuit Court for Baltimore City on the morning of 13 August 2026 and announced them the same day. Both are brought by the Mayor and City Council of Baltimore ex rel. Ebony Thompson, the City Solicitor, and both carry the court's e-filing stamp: the Kalshi case is C-24-CV-26-005532, docketed at 9.35 a.m., and the Polymarket case is C-24-CV-26-005535, docketed at 9.23 a.m. The Kalshi complaint runs to 46 pages and names seven defendants, KalshiEX LLC and Kalshi Inc., Robinhood Markets, Inc. and Robinhood Derivatives LLC, Webull Corporation and Webull Financial LLC, and Coinbase Financial Markets, Inc. The Polymarket complaint runs to 27 pages and names three, QCX LLC, Blockratize Inc. and QC Tech LLC. Both plead violations of Baltimore's Consumer Protection Ordinance, article 2, subtitle 4 of the Baltimore City Code, which prohibits any 'unfair, abusive, or deceptive trade practice' in the sale or offer of consumer goods, realty or services and takes that definition from title 13 of the Maryland Commercial Law Article. The Kalshi complaint carries eight counts, a deceptive practices count and an unfair and abusive practices count against each of Kalshi, Robinhood, Webull and Coinbase in turn; the Polymarket complaint carries two. The theory in both is that the contracts are sports wagering as Maryland law defines it, 'the business of accepting wagers on any sporting event by any system or method of wagering, including single-game bets, teaser bets, parlays, over-under bets, moneyline bets, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets', offered without the licence that definition requires. The city asks for the maximum statutory penalties, an injunction 'mandating that Defendants cease operating their unauthorized sports wagering platforms in the City of Baltimore and prohibiting them from accepting transactions from Baltimore residents', disgorgement, restitution and other relief, and demands a jury. Mayor Brandon M. Scott said in the announcement that 'These companies are running sportsbooks without licenses and betting that a new label will put them above the law' and that 'Baltimore will not let multibillion-dollar companies put profits over people and harm our communities through illegal gambling'. Thompson said that 'Kalshi and Polymarket cannot circumvent Baltimore's consumer protections by repackaging gambling as something else or claiming federal regulation puts them beyond the reach of our laws'. A Kalshi spokesperson told The Block that 'People use regulated prediction markets like Robinhood, Kalshi and CME because they're neutral, fair and transparent marketplaces' and that 'we will defend these claims in court'. Polymarket had not responded to either outlet read here by the time each published.

Why it matters

The three brokers are the point. Every previous action on this beat has gone at the venue; this one goes at the layer that sells the contract to a retail customer, and it says why in the pleading rather than by implication. Paragraphs 54 to 56 describe the Webull hub of February 2025, the Robinhood hub of March 2025 and the Coinbase hub of December 2025 in identical terms, that each lets a customer buy and sell Kalshi contracts without leaving the partner's platform, that the offering is 'practically identical' to Kalshi's own because the contracts are sourced from Kalshi, and that the partner 'and Kalshi each receive a fee whenever an event contract is purchased' on that hub. That is a revenue-sharing arrangement pleaded as joint participation, and the numbers the complaint puts beside it are the reason it matters: Kalshi's fee revenue in 2025 was $263.5m with 89 per cent from sports wagering, Robinhood told its fourth-quarter call that users traded more than 12 billion contracts in 2025 on a business run rate above $300m, and Webull reported 152 million contracts in the fourth quarter alone. The second thing is the one that answers the industry's standing defence, and it is in paragraphs 29 and 30. Maryland's definition of sports wagering already lists exchange wagering, and the state's own regulation defines exchange wagering as a wager in which one bettor wagers with or against another bettor through a licensed sports wagering operator. From which the complaint concludes that the General Assembly 'anticipated and expressly regulated wagering formats in which participants take opposite sides of a sporting-event outcome'. In Maryland, saying that a platform is a market between customers rather than a book does not exit the licensing regime; it names a licensed category inside it. The Polymarket complaint then attacks the premise itself. It sets out a probability-based fee that peaks at 0.75 per cent when an outcome is at even odds and falls towards zero at either extreme, and it says the venue 'has recently created an in-house team to serve as market makers' through which it 'has taken opposing positions, absorbed imbalances in bettor demand, and profited from price movements', so that 'users effectively trade against the house rather than other bettors'. Whether or not that is proved, it is a claim about market structure rather than about labels, and it is the one a regulator or a court can test. The suits also land two days after the Commodity Futures Trading Commission declared a state enforcement action against Kalshi a major market disturbance and ordered the exchange to keep operating. The complaints meet that argument head on, citing KalshiEx LLC v. Cox, in which the District of Utah granted the state summary judgment on 4 August 2026 on whether the Commodity Exchange Act preempts state anti-gambling law, and the District of Maryland's refusal of a preliminary injunction to Kalshi on 1 August 2025, where the court held that Maryland's sports wagering laws and the Commodity Exchange Act operate 'in tandem'.

What is not settled

Neither complaint quantifies the harm. There is no figure for what Baltimore residents wagered, what they lost, or what the city says it forwent in tax; the loss estimates the pleading relies on are national and come from a Roosevelt Institute analysis of public trading data and from a Wall Street Journal report rather than from anything the city has measured or obtained in discovery. Two citation problems in the Kalshi complaint are worth recording because they are checkable against the code. Every one of the eight counts cites Baltimore City Code article 2, section 4-4 for the entitlement to 'civil penalties of up to $1,000' per violation and per day; section 4-4 is the criminal penalties provision and section 4-3 is the civil one. The demand for relief cites section 4-3(a) correctly, and both sections set the same $1,000 ceiling with the same rule that each violation and each day is a separate offence, so nothing in the arithmetic turns on it. Separately, section 4-5(d), the provision that authorises the City Solicitor to sue, names injunctive relief and 'the imposition and collection of civil penalties' and nothing else; the restitution and disgorgement the city asks for are sought under the catch-all for other relief available in law or equity. No judge is named on either complaint, no hearing is set, and nothing in either document says whether the city sought a temporary restraining order. Robinhood, Webull and Coinbase had said nothing publicly in either report read here, so the only defence on the record is Kalshi's. The preemption question the case turns on remains open and the authorities point both ways: the reports note decisions favouring state regulators in New York, Wisconsin and Utah, while the federal Commission has taken the opposite view in an order of its own. And the ordinance is untested at this scale. Subtitle 4 was enacted by Ordinance 23-266 and replaced a false advertising provision; whether a municipal consumer statute can reach a federally designated contract market is a question no Maryland court has answered.