TLDR
- Polymarket filed a federal lawsuit against New Mexico’s Attorney General and gaming board members
- The company wants a court to rule that federal law overrides state gambling law
- Polymarket claims only the CFTC has authority over prediction markets
- The lawsuit follows New Mexico’s earlier case against competitor Kalshi
- New Mexico rejected Polymarket’s requests to pause enforcement before the suit was filed
Polymarket has taken New Mexico to federal court. The company filed suit against Attorney General Raul Torrez and six members of the state’s gaming control board.
The lawsuit was filed in the U.S. District Court. Polymarket is asking for a declaratory judgment stating that federal law overrides state gambling law.
The company also wants an injunction. This would stop New Mexico from taking enforcement action against its platform.
Polymarket says it could suffer “irreparable harm” if the state moves forward. It argues that state enforcement would hurt liquidity and disrupt banking relationships.
The company also says user confidence would take a hit. This is true, it argues, even if the state’s case has no merit.
Polymarket’s core claim is that only the Commodity Futures Trading Commission can regulate prediction markets. This is the same position taken by rival platform Kalshi.
The company argues its contracts are legal under federal rules. It says state enforcement conflicts with that framework.
In its court filing, Polymarket wrote that state action would create a “chilling effect on lawful activity.” It also said New Mexico residents would lose access to a federally regulated exchange.
How the Dispute Unfolded
The conflict traces back to June 4. That’s when Attorney General Torrez sued Kalshi, claiming its sports contracts violated state gambling laws.
Polymarket tried to avoid a similar fight. On June 8, the company contacted the New Mexico Department of Justice.
Polymarket asked officials to pause any enforcement against it. The company wanted to wait until the Kalshi case was resolved.
The CFTC filed its own lawsuit against New Mexico on June 22. The federal agency argued that only it can oversee prediction markets.
Polymarket renewed its request to pause enforcement that same day. The company again asked the state to hold off.
New Mexico Rejects the Request
New Mexico turned down Polymarket’s appeals on June 29. Torrez signed an amicus brief supporting enforcement of state gaming laws around the same time.
Polymarket says these actions reveal the state’s intent. The company wrote that New Mexico wants to “shut down federally authorized markets despite clear federal preemption.”
The lawsuit is now before the federal court. No ruling has been issued yet on Polymarket’s requests for a declaratory judgment or injunction.
The case adds to a broader legal fight between prediction market platforms and state regulators. Kalshi’s case against New Mexico remains active as well.
