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New York Sues Polymarket as State Crackdown on Prediction Markets Continues
- Cryptocurrency
Crystal Kim- 3 minutes read
The state of New York has sued prediction market platform Polymarket in its latest crackdown on the industry, alleging that it ran an illegal gambling operation. This follows similar actions against Kalshi, Coinbase, and Gemini, with both states and these prediction market platforms calling on the Supreme Court to settle the root issue of these lawsuits.
New York Sues Polymarket Over Alleged Gambling Operation
New York Attorney General Letitia James has sued the prediction market platform, arguing that it ran an illegal gambling operation. This marks the state’s latest efforts to crack down on prediction markets, arguing that these platforms continue to violate its gambling laws.
New York sued Kalshi in July, arguing that it operated as an illegal and unlicensed gambling business. This followed similar actions against Coinbase and Gemini over their prediction markets earlier in the year.
Meanwhile, this is part of a broader crackdown by states on prediction markets, with several states arguing that these platforms operate as unlicensed sports betting platforms by offering sports-related contracts. In response, the CFTC has sued these states to defend its exclusive jurisdiction over platforms like Polymarket, arguing that these contracts are swaps, which it regulates.
So far, the courts have offered differing views. The 9th Circuit Court of Appeals sided with Nevada in its case against Kalshi, stating that these sports contracts are sports bets. However, the 3rd Circuit Court of Appeals ruled against New Jersey, stating that the CFTC has exclusive jurisdiction over sports prediction markets.
The Supreme Court is expected to step in, as two certiorari petitions are currently before the court, seeking clarification on whether states can regulate sports prediction markets. However, crypto traders bet that the Supreme Court is unlikely to hear these petitions anytime soon. Data from the top prediction market platform Polymarket shows only a 25% chance the court will accept a sports events contract case by December.
