Mayor Brandon Scott and the Baltimore City Council filed separate lawsuits against Kalshi and Polymarket, alleging the prediction market operators have been selling unlicensed sports wagers to Baltimore residents while misrepresenting their products as something other than gambling.
The legal theory is consumer protection, not federal preemption. Baltimore is not arguing that the CFTC got the regulatory classification wrong — that fight is already running in federal courts in New York and Washington state. Baltimore is arguing that whatever these contracts are called at the federal level, the companies told residents something misleading about what they were buying. That is a different lever, and it does not require the city to win the classification argument to collect civil penalties.
This matters because it works around the preemption shield that Kalshi has used effectively elsewhere. Kalshi's core defense in the New York litigation rests on the Commodity Exchange Act: CFTC-regulated event contracts, the argument goes, cannot be banned by state gambling authorities. A King County judge in Washington found that argument worth taking seriously while still ordering operational restrictions. Baltimore is not leading with the gambling statute. It is leading with the consumer protection ordinance, which sits in different legal territory.
The city's prior enforcement record sharpens this. Baltimore went after major sportsbooks and sweepstakes casino operators using the same ordinance before turning to prediction markets. That sequencing is deliberate — it builds a record of consistent application, which is useful if the companies argue they are being singled out or if the cases reach appellate review.
What I think the reporting undersells is how the municipal layer changes the litigation math. A federal preemption defense is designed for state regulators with sovereign authority over gambling. A city consumer protection claim does not carry the same threat to the companies' national operating model — Baltimore cannot geofence Kalshi out of Maryland — but it creates costs, it generates adverse headlines, and it invites other cities to file using the same template. The Baltimore ordinance is not an existential instrument. It is a franchise tool. If a dozen mid-sized cities file similar actions, the cumulative legal overhead changes the compliance calculus faster than any single federal proceeding.
I am adjusting here for my own tendency to reach for the catastrophic scenario. The more probable path is that these cases settle quietly or get stayed pending federal resolution, and Baltimore collects something modest. The preemption argument, wherever it ultimately lands, is the structural question. What Baltimore has done is add pressure at the margins.
