Polymarket, the cryptocurrency-based prediction market, is facing a class action lawsuit in the Southern District of New York alleging that it operates as an unregulated sports better platform from its Manhattan headquarters.
A California resident Lorenzo Miro San Diego argued that the platform, which allows users to trade shares on outcome of an event, essentially offers unregulated online sports gambling in violation of New York’s sports betting regulations.
“Polymarket has expressly repositioned itself as a nationwide sportsbook (at least for now), open to users in all 50 states, while consciously operating without the state licensure required to offer sports betting,” write San Diego’s attorneys, in the complaint. “In so doing, Polymarket knowingly and blatantly defies applicable state anti-gambling laws.
The lawsuit comes amid a wave of resistance to Polymarket’s model. Other similar prediction markets like Kalshi have faced cease-and-desist letters and lawsuits from state regulators. Earlier this week, Nevada state regulators won a temporary restraining order blocking Polymarket from offering event-based contracts in the state for two weeks after it found the platform to violate Nevada gaming law
San Diego’s lawyers argue that Polymarket’s status as a predictions market “is purely cosmetic, intended to mask the reality that the platform facilitates and profits from illegal gambling.” The volume of the platform’s sports-related contracts is estimated to be greater than $6 billion, and its event offerings like point spreads and over/under wagers are indistinguishable from traditional sportsbooks.
Polymarket did not respond to a request for comment.
After first legalizing in-person sports betting in 2019, the state expanded mobile sports betting in 2022 to nine licensed operators who are subject to rules and regulations designed to protect the public. In October, the New York State Gaming Commission sent Polymarket’s competitor Kalshi, a cease-and-desist letter over offering sports gaming in New York — sparking a legal battle over whether Kalshi is exempt from state-level gambling regulations.
San Diego, who allegedly lost thousands betting on sports on the predictions platform under the belief that it was a legal platform, filed the class action lawsuit on behalf of anyone nationwide who spent money wagering on Polymarket’s mobile or web sportsbook.
The lawsuit is seeking a jury trial.
