Polymarket Countersues New York Governor Kathy Hochul and AG Letitia James

Polymarket has countersued New York Gov. Kathy Hochul (D) and Attorney General Letitia James after the two state officials jointly filed a lawsuit alleging that the prediction market is running an illegal gambling operation. New York Gov. Kathy Hochul (left) and Attorney General Letitia James sued Polymarket this week on illegal gambling allegations. In response, Polymarket sued the two state officials. (Image: Shutterstock) Polymarket, headquartered in New York, dominates the global prediction market industry, though its US-focused platform lacks such market share. The cryptocurrency-based prediction market responded to the state’s legal complaint by seeking to move the lawsuit to New York’s federal Southern District Court. Polymarket additionally filed a civil complaint against Hochul and James, alleging that their lawsuit claiming it’s violating state gambling laws could have “imminent and irreparable harm.” This action seeks to prevent imminent and irreparable harm arising from New York’s enforcement of state gambling laws against federally regulated derivatives exchanges — enforcement Congress has expressly prohibited,” Polymarket said in its civil suit. The prediction market is seeking a declaratory judgment ruling that New York’s gambling laws are preempted by the Commodity Exchange Act (CEA), which governs its trading platform under regulation by the Commodity Futures Trading Commission (CFTC). State Allegations Hochul and James alleged in their complaint that Polymarket is violating state gambling laws by offering trading on sporting events. The lawsuit cited an investigation by James’ office that concluded Polymarket’s prediction market to be an “illegal, unlicensed gambling operation” that allows anyone aged 18 and older to participate. I will always stand up for New Yorkers when bad corporate actors prey on consumers and threaten tax dollars that fund schools and critical public services,” said Hochul. “By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.” James alleged that Polymarket’s prediction market meets the legal definition of gambling because the outcomes of its event markets are based on chance. “Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” said Attorney General James. “By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support. My office will never hesitate to take action to defend our laws and keep New Yorkers safe.” Polymarket Claims Federal Supremacy In its countersuit, Polymarket claimed its business operates in a transparent manner under federal law. The platform rejected Hochul and James’ claims that its sports contracts constitute illegal sports betting based on the fact that, unlike a sportsbook, it does not set a market’s prices. “Sportsbooks set odds based on proprietary information; event contracts are priced by supply and demand in a relevant market,” Polymarket attorneys wrote. “Sports bettors typically place wagers against the ‘house,’ so sports bettors and sportsbooks are counterparties to the gambling transaction.” But Polymarket US does not operate as a counterparty in the derivatives market. Instead, it operates as a transparent, centralized exchange matching orders of third parties,” the complaint read. “Polymarket US makes money by charging a flat fee for each transaction; unlike a sportsbook, it does not make money when a bettor loses, and it makes the same amount regardless of the outcome of a particular event,” the lawsuit said. The post Polymarket Countersues New York Governor Kathy Hochul and AG Letitia James appeared first on Casino.org.