The New Mexico “prediction markets row” continues, as Polymarket rushes to federal court, filing a lawsuit against AG Raúl Torrez and leadership members in the state's Gaming Control Board with vested interests, citing “imminent and irreparable harm.”
This comes barely weeks after New Mexico’s gambling regulators sued Kalshi for offering what it calls “gambling-like sports event contracts.” Polymarket acted quickly, seeking an injunction that would allow it to continue operating in the state while the lawsuit is determined. Arguing that they run under the federal CFTC oversight, preempting state gaming laws. Here’s more.
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Polymarket Re-Ignites Legal Battles in New Mexico Citing “irreparable Harm”
Since entering the scene, prediction market operators have engaged in legal battles with regulators. The latest tango is Polymarket’s decision to file a lawsuit against several members of the New Mexico Gaming Control Board and Attorney General Raul Torrez.
It came after the state sued Kalshi, another popular operator on the
list of prediction markets
offering sports event contracts. This was on June 4th, and the state and gambling regulators sought the right to enforce gambling laws on a platform they alleged was operating like a bookmaker.
If granted, the injunction would allow Polymarket to continue operating normally as the litigation continues. In its filings, the company expressed fears that being subjected to the state’s gambling laws would cause imminent and irreparable harm to its business.
Key Factors That Could Strengthen Polymarket’s Position
Polymarket’s arguments in the lawsuit are strengthened by:
Irreparable Harm Claim
Polymarket stands the chance of getting the injunctive relief if the court agrees with the claims that New Mexico’s gambling law enforcement will cause irreversible business losses.
Federal Regulation Argument
With prediction markets being regulated by the CFTC, Polymarket can argue that it is not subject to New Mexico’s gambling laws.
CFTC Vs New Mexico Lawsuit
The CFTC’s chair, Michael Selig, countersued the state of New Mexico after it sued Kalshi. Should this lawsuit’s ruling favor the CFTC, it would also favor Polymarket.
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Challenges Standing in Polymarket’s Way
As Polymarket seeks a legal victory in New Mexico, it faces the following hurdles:
New Mexico’s Enforcement Powers
New Mexico has the right to enforce its gambling laws. This has an immediate effect on Polymarket’s operations in the state unless its injunction bid is successful.
The Prediction Market Woes (legal Uncertainty Continues)
New Mexico is one among the many states with ongoing lawsuits challenging their core operational framework, specifically on sports contracts.
What Analysts Predict Will Come Next
Polymarket’s injunction will be watched closely as its outcome could have lasting effects on the regulation of sports event contracts. A Polymarket victory could strengthen the “relief narrative” that prediction markets as a whole seek amid the back-to-back court battles. Conversely, a loss could reinforce fears of “irreparable harm.”
Final Thoughts
There you have it: the prediction markets v states’ legal woes continue with New Mexico as the latest front, and Kalshi bearing the brunt of legislative action in state court (as of June 4th). But they’re not alone. Immediately after, on June 12th, the CFTC jumped in to countersue New Mexico for interfering with its sole regulatory role over prediction markets, arguing that prediction markets fall under its jurisdiction and preempt local laws.
Not long after, Polymarket now joins the legal tango, filing a fresh lawsuit against AG Raúl Torrez and members of the state's Gaming Control Board, citing imminent “irreparable harm” to its business model, instead of the enforcement actions tabled. As we await regulatory clarity, join in using our on-page banners and leverage your smarts on the real-time markets.
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