Polymarket Seeks Preliminary Injunction Through New York Lawsuit

• Polymarket recently filed a countersuit against New York
• The prediction market company seeks a preliminary and permanent injunction against the state
• Polymarket files countersuit after New York Attorney General Letitia James and Gov. Kathy Hochul (D) announced a lawsuit against the company

Polymarket has filed a countersuit against the state of New York after being hit by a lawsuit from New York Attorney General Letitia James and Gov. Kathy Hochul (D).

The lawsuit seeks to prevent imminent and irreparable harm arising from New York’s enforcement of state gambling laws against Polymarket and its sports event contracts. Polymarket legal counsel notes Congress has “expressly prohibited” state’s from enforcing their own gambling laws against federally regulated derivatives exchanges.

The lawsuit came on the same day that New York filed its own lawsuit against the company, seeking a court order stopping Polymarket from operating in New York and requesting the company pay a fine equal to three times the gains it made through its sports event markets.

Seeking Preliminary Injunction

The threat to Polymarket US “is immediate and concrete,” the prediction market operator’s legal counsel wrote in its lawsuit. New York’s lawsuit against Polymarket, filed in New York County Supreme Court, alleges Polymarket’s existing sports event contracts meet the legal definition of gambling as the outcomes of the events in which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.

Polymarket legal counsel asserts that the state’s lawsuit “is an extraordinary assertion of state power squarely foreclosed by federal law.”

“Polymarket US therefore faces a real and imminent risk of enforcement, exposing it to civil penalties, potential criminal liability, forced cessation of operations within New York, and severe collateral consequences to its nationwide operations. The harm resulting from state enforcement would be irreparable. Even a meritless state enforcement action would immediately disrupt Polymarket US’s federally authorized operations, fragment a national market, reduce liquidity, jeopardize critical banking and commercial relationships, undermine user trust, and harm New York residents. Even the threat of enforcement forces Polymarket US to choose between exercising its federal right to operate nationwide and submitting to unlawful state coercion,” the lawsuit reads.

Polymarket US seeks declaratory and injunctive relief to prevent New York state gambling laws from affecting its sports event contracts and other markets. This will, the lawsuit reads, maintain the integrity of federal regulatory framework and avert imminent harm.

Polymarket Fighting New York’s Lawsuit

New York’s lawsuit requests Polymarket be completely prohibited from offering its sports event contracts in the state without a sports betting license, make full restitution to customers who have engaged in sports event contracts on its platforms, disgorge all amounts obtained in connects with the sports event contracts, pay a penalty of three times the amount of its gains in New York, and pay a penalty of $100,000 for each offering or attempt to offer sports wagering or online sports wagering within New York.

Neal Kumar, chief legal officer of Polymarket, told Sports Betting Dime the company will fight the lawsuit.

“Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. We believe in New York and we’re staying here. While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users. We didn’t run to preemptively sue the state — we chose to engage with them directly on the substance and address their concerns. They preferred the media hit. Any time the AG’s office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets,” he said.