Baltimore Sues Kalshi and Polymarket Over Illegal Sports Betting Allegations

The legal landscape for prediction markets and social casinos is facing a major challenge in Baltimore. City officials have initiated lawsuits against major operators Kalshi and Polymarket, alleging that these platforms are essentially functioning as illegal sportsbooks. The legal actions, filed by Mayor Brandon Scott and the Baltimore City Council in the Circuit Court for Baltimore City, accuse the companies of violating the city's Consumer Protection Ordinance by misleading residents about the legality and regulatory status of their services.

The complaints argue that despite using terms like event contracts or prediction-market trades, the services provided are indistinguishable from traditional sports betting. Users are reportedly allowed to wager on game winners, point spreads, total scores, and individual player statistics. By avoiding the sportsbook label, these companies are accused of circumventing essential oversight, taxation, and responsible gambling requirements that licensed operators in Maryland must adhere to.

Numbers and facts

The litigation extends beyond prediction markets. On March 4, Baltimore also sued six major sweepstakes casino operators, including VGW Holdings (Chumba Casino), B2Services (McLuck), and High 5 Games. The city contends that the dual-currency model used by these platforms—where users buy virtual gold coins to receive bonus sweeps coins redeemable for cash—constitutes illegal gambling under state law. The city is seeking civil penalties, restitution for consumers, and an injunction to stop these platforms from operating within its jurisdiction.

"These companies are running sportsbooks without licenses and betting that a new label will put them above the law. It won't. Baltimore will not let multibillion-dollar companies put profits over people and harm our communities through illegal gambling." - Brandon Scott, Mayor of Baltimore

Background

City Solicitor Ebony M. Thompson stated that the city would not allow companies to bypass consumer protections by simply repackaging gambling as something else. The lawsuit highlights that the platforms closely resemble traditional online sportsbooks and offer similar wagers like moneyline bets and tournament outcomes. Furthermore, the city argues that these platforms target vulnerable populations, including minors and individuals struggling with gambling addiction, through cartoonish designs and celebrity endorsements from figures like Drake.

Adam Levitt, a founding partner at DiCello Levitt, noted that allowing these companies to evade gambling laws would set a dangerous precedent. The city aims to hold these companies accountable for deceptive conduct and ensure they operate within the same rules designed to protect the public. The push for civil penalties and the disgorgement of profits signals a zero-tolerance approach toward unlicensed operators trying to tap into the local market without proper authorization.

Why it matters for German players

For players in Germany, this legal battle in the U.S. underscores the global shift toward stricter regulation of online gambling alternatives. In Germany, the State Treaty on Gambling 2021 (GlüStV 2021) provides a clear framework, and only operators on the GGL whitelist are permitted to offer services. Prediction markets and sweepstakes models that attempt to bypass these rules would likely face immediate action from the GGL. German players are protected by the 1,000 Euro monthly deposit limit and the 1 Euro per spin rule, which are designed to prevent the very risks Baltimore officials are currently litigating against.

What it means for GGL-licensed casinos

For GGL-licensed casinos, the crackdown in Baltimore is a positive development. It reinforces the importance of a transparent, regulated market where all participants play by the same rules. When unlicensed entities are allowed to operate under the guise of financial trading or social gaming, it creates an unfair competitive environment. The GGL's proactive stance in Germany ensures that such grey-market activities are limited, protecting the integrity of the legal gambling sector and ensuring that tax revenues and consumer protection standards are maintained.