Polymarket Hit With Nationwide Class Action Over 'Illegal Gambling' Claims

Benzinga_recent_news02-06

Polymarket, the crypto-enabled prediction market, has been hit with a major nationwide class action lawsuit in the U.S. District Court for the Southern District of New York (SDNY). The lawsuit, filed ...

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This comes at a time of booming popularity and regulatory scrutiny for the industry. If successful, regulated sportsbooks like DraftKings and Flutter Entertainment could benefit.","collect":0,"end_time":0,"defaultTopTitle":"benzinga.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4008":"航空公司","CEA":"东方航空","BK4500":"航空公司"},"translate_title":"Polymarket因“非法赌博”指控引发全国集体诉讼","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CEA":1},"content_text":"Polymarket, the crypto-enabled prediction market, has been hit with a major nationwide class action lawsuit in the U.S. District Court for the Southern District of New York (SDNY).\nThe lawsuit, filed by plaintiff Lorenzo Miro on behalf of a proposed nationwide class, alleges that Polymarket is operating an “illegal online sports gambling platform.” \nThe filing argues that while the platform is marketed as a sophisticated “prediction market” for price discovery, it is, in reality, an unlicensed sports betting enterprise that violates various state laws.\nThe legal challenge comes at a time when prediction markets have surged into the mainstream. \nThese platforms have become so popular that total trading volume across leaders like Polymarket and Kalshi surpassed $17 billion in January 2026 alone.\nThe sector’s growth is being fueled by high-profile participants and significant payouts. \nEthereum co-founder Vitalik Buterin recently shared a strategy that netted him over $70,000 by betting against irrational market predictions. \nThis massive influx of capital has put a target on the industry, as regulators and trial lawyers look to reclassify these “event contracts” as taxable, regulated wagers.\nThe SDNY lawsuit aims to capitalize on a string of recent regulatory setbacks for the platform.\nLast week, a Nevada judge issued a temporary restraining order (TRO) forcing Polymarket to halt operations in the state, finding that its event contracts constitute “unlicensed wagering.”\nIn January, the Tennessee Sports Wagering Council ordered Polymarket to stop offering sports contracts, void existing trades, and refund users by January 31.\nPolymarket did not immediately return Benzinga’s request for comment regarding the SDNY filing. \nIn previous statements related to state-level actions, the company has maintained that it is a federally regulated product and that it intends to challenge orders that it believes are preempted by the Commodity Exchange Act (CEA).\nImage: Shutterstock\nTo add Benzinga News as your preferred source on Google, click here.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.36.2","shortVersion":"4.36.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2609586705","isCrawlerRequest":true}