Baltimore has sued prediction market platforms Kalshi and Polymarket, alleging they are offering sports betting without the licenses required under Maryland law. The filing adds to a growing national legal campaign that now spans more than 20 cases and turns on a central regulatory question: whether sports-related event contracts should be treated as financial products or gambling. Maryland regulators had already issued a cease-and-desist order to Kalshi over sports wagering in 2025, and Kalshi is appealing that action. Pressure has expanded in 2026, with New York suing Kalshi on July 31 to stop its operations and seeking profit forfeiture plus fines of up to three times its New York revenue, while Kentucky sued both Kalshi and Polymarket in June and Tennessee ordered Kalshi, Polymarket, and Crypto.com in January to halt sports-contract activity. Kalshi and Polymarket argue their contracts are federally regulated products overseen by the CFTC (U.S. derivatives regulator), while states argue that contracts tied to sports outcomes amount to betting regardless of whether they are structured as binary options on a CFTC-registered exchange. Polymarket, which runs on the Polygon blockchain, already faces limits after a 2022 settlement with the CFTC barred U.S. users, and the latest lawsuits could force tougher geoblocking or bring escalating penalties. The broader stakes are high for prediction markets because a ruling that sports contracts require state gambling licenses would subject platforms to the same state-by-state approval process that major sportsbooks faced after the Supreme Court ended the federal sports betting ban in 2018.