Polymarket faces class action lawsuit for sports betting
Polymarket, a prediction market based on cryptocurrency, is currently embroiled in a legal battle as a class action lawsuit has been filed against it in the Southern District of New York. The lawsuit alleges that the platform operates as an unregulated sports betting platform from its headquarters in Manhattan. Lorenzo Miro San Diego, a resident of California, filed the lawsuit claiming that Polymarket functions as an unlicensed online sports gambling platform, thereby violating New York’s sports betting regulations.
According to San Diego’s attorneys, Polymarket has positioned itself as a nationwide sportsbook accessible to users in all 50 states without obtaining the required state licensure for offering sports betting. The complaint argues that by operating without the necessary licenses, Polymarket is willfully flouting state anti-gambling laws. The lawsuit against Polymarket is part of a broader trend of resistance towards similar prediction markets like Kalshi, which have also faced legal challenges from state regulators.
The legal battle intensifies as Nevada state regulators recently obtained a temporary restraining order against Polymarket, preventing the platform from offering event-based contracts in the state for a two-week period due to violations of Nevada gaming laws. San Diego’s lawyers assert that Polymarket’s classification as a predictions market is purely cosmetic and serves to mask the platform’s true nature as a facilitator of illegal gambling activities. The significant volume of sports-related contracts on the platform, amounting to over $6 billion, along with offerings like point spreads and over/under bets, resemble those found in traditional sportsbooks.
Despite repeated calls for commentary, Polymarket has not responded to the allegations raised in the lawsuit. New York expanded its sports betting landscape by introducing mobile sports betting in 2022, granting licenses to nine operators subject to regulations aimed at safeguarding the public. In a related incident, the New York State Gaming Commission issued a cease-and-desist letter to Kalshi, Polymarket’s competitor, over its sports gaming offerings in the state, triggering a legal dispute over the platform’s exemption from state gambling regulations.
San Diego, the plaintiff in the class action lawsuit against Polymarket, claims to have lost a substantial amount of money gambling on sports through the platform under the false belief that it was a legally compliant entity. The lawsuit, seeking a jury trial, aims to represent individuals nationwide who have wagered on Polymarket’s sportsbook through mobile or web platforms. Amid escalating legal challenges and regulatory scrutiny, Polymarket’s future remains uncertain as it navigates the complex legal landscape surrounding sports betting regulations.