The Polymarket lawsuit landscape in 2026 is not a single case but a sprawling fight on three fronts: a consumer class action in New York accusing the platform of running an illegal sportsbook, enforcement suits and cease-and-desist orders from more than a dozen states, and a federal preemption battle in which the Commodity Futures Trading Commission has sued states to defend Polymarket’s right to operate. Courts have split on the central question, and a Ninth Circuit ruling expected out of the Nevada litigation could push the dispute toward the U.S. Supreme Court.
The Consumer Class Action in New York
On February 4, 2026, California resident Lorenzo Miro San Diego filed a class action complaint against Blockratize, Inc. and affiliated Polymarket entities in the U.S. District Court for the Southern District of New York, case number 1:26-cv-00973.1Class Action.org. Diego v. Blockratize Inc. et al., Complaint The complaint alleges Polymarket operates an illegal online sports gambling platform dressed up as a “prediction market,” violates state anti-gambling laws, engages in deceptive business practices and false advertising, and has been unjustly enriched.
The proposed class is nationwide: anyone who spent money wagering on Polymarket’s sports offerings. Counsel from Edelsberg Law and Shamis & Gentile have called the prediction-market branding “purely cosmetic, intended to mask the reality that the platform facilitates and profits from illegal gambling.”2AM New York. Polymarket Gets Hit With Class Action Lawsuit Over Sports Betting The suit demands a jury trial and remains in its early stages.
State Enforcement Lawsuits Against Polymarket
State attorneys general and gaming regulators have been the most active litigants against Polymarket. At least 11 states have issued cease-and-desist orders to prediction market companies, with active litigation running in at least eight.3Stateline. Kalshi and Polymarket Are Skirting Laws on Sports Betting, States Say A bipartisan coalition of 39 state attorneys general and the District of Columbia has filed an amicus brief urging a federal court to uphold state authority to regulate sports gambling.4The Guardian. US Prediction Markets Face Lawsuits From States
Nevada
The Nevada Gaming Control Board sued Blockratize, Inc., QCX LLC, and Adventure One QSS, Inc. in state court, arguing Polymarket was conducting unlicensed wagering. The case was briefly removed to federal court in February 2026 before being sent back.5CourtListener. State of Nevada ex rel. Nevada Gaming Control Board v. Blockratize, Inc. et al. On May 29, 2026, Judge Jason Woodbury of the First Judicial District Court in Carson City granted a preliminary injunction blocking Polymarket from operating in the state.6Las Vegas Review-Journal. Judge Blocks Polymarket From Operating in Nevada
Wisconsin
On April 23, 2026, the Wisconsin Department of Justice filed three lawsuits in Dane County Circuit Court against five prediction market companies. One targeted Polymarket directly. The state alleged the platforms were “working together to facilitate illegal sports betting throughout the state” by relabeling sports bets as event contracts, and sought injunctive relief rather than monetary damages at the outset.7Wisconsin Examiner. Wisconsin DOJ Sues Online Prediction Markets, Charging Illegal Sports Betting
Kentucky
Kentucky Attorney General Russell Coleman sued Polymarket and Kalshi on June 17, 2026, in Franklin Circuit Court. The complaints accuse the platforms of operating illegal sportsbooks without state gaming licenses, bypassing consumer protection and tax requirements, and failing to provide gambling-addiction resources required by Kentucky law.8Kentucky Attorney General. Attorney General Coleman Files Lawsuits Against Prediction Markets Coleman’s office rejected the argument that rebranding money lines, spreads, and prop bets as “event contracts” makes them legal. The suits reference affiliated entities including Robinhood and Webull, and followed a challenge by prediction market companies to Kentucky’s new 14.25% tax on their transaction fees.9LPM. Kentucky Attorney General Sues Prediction Markets, Online Sweepstakes
Other State Actions
Connecticut, Arizona, and Illinois all issued cease-and-desist orders naming both Polymarket and Kalshi. New York’s attorney general has pursued enforcement against prediction market intermediaries Coinbase and Gemini Titan. Regulators in Massachusetts, Ohio, and Maryland have successfully persuaded courts to deny prediction market platforms’ requests to block state enforcement.10Reuters. Betting Verdict in Kalshi Case Could Shape Prediction Markets
Polymarket Suing Massachusetts
Rather than only defend, Polymarket filed a preemptive suit of its own. On February 9, 2026, the company brought QCX LLC v. Campbell, No. 1:26-cv-10651, in the U.S. District Court for the District of Massachusetts against Attorney General Andrea Campbell and Massachusetts Gaming Commission officials.11Action Network. Tracking Prediction Market Lawsuits The complaint argues that any attempt by Massachusetts to regulate the platform would cause “irreparable harm,” including criminal liability, civil penalties, and forced shutdown of operations reaching well beyond the state.12WCVB. Polymarket Sues Massachusetts in Prediction Market Regulation Fight
The core theory is federal preemption. Polymarket Chief Legal Officer Neal Kumar put it directly: “Congress gave the CFTC, not states, exclusive authority over event contracts.”13Yahoo Finance. Polymarket Sues Massachusetts Over Prediction Market Regulation The filing landed alongside a related Massachusetts case in which Judge Christopher Barry-Smith granted a preliminary injunction against Polymarket’s competitor Kalshi, rejecting the same preemption argument. No ruling had been issued in Polymarket’s own suit as of mid-2026.
The Federal Government Suing States
The most unusual feature of the Polymarket litigation is that the federal government has entered the fight on the platforms’ side of the jurisdictional question. The CFTC and the Department of Justice have argued in court that states cannot regulate event contracts at all, because Congress gave the CFTC exclusive authority.
On April 2, 2026, the CFTC and DOJ sued Connecticut, Arizona, and Illinois over their cease-and-desist orders. CFTC Chairman Michael Selig framed state regulation as creating a “fragmented patchwork” that increases fraud risk.14PBS NewsHour. Federal Government Sues Three States for Trying to Regulate Prediction Markets15Reuters. US Sues Illinois Over Regulation of Prediction Markets On April 24, the agency and DOJ sued New York, Governor Kathy Hochul, Attorney General Letitia James, and state gaming officials in the Southern District of New York over the state’s cease-and-desist letter to KalshiEX and its enforcement actions against Coinbase Financial Markets and Gemini Titan.16Bloomberg Law. CFTC Sues New York to Assert Prediction Market Jurisdiction On May 19, the CFTC filed suit against Minnesota to block a new state law criminalizing prediction market operations before it took effect on August 1, 2026.17CFTC. CFTC Files Lawsuit Against Minnesota The agency states on its own website that prediction markets are “federally regulated” and “under federal law can operate in all 50 states.”18CFTC. Prediction Markets
How Courts Have Ruled
The rulings so far do not point one direction. The strongest decision for the platforms came on April 6, 2026, when the U.S. Court of Appeals for the Third Circuit affirmed a preliminary injunction preventing New Jersey from enforcing its gambling laws against Kalshi’s sports-related event contracts. The court found three independent grounds for preemption: field preemption from the Commodity Exchange Act’s grant of exclusive jurisdiction over swaps; conflict preemption because state enforcement obstructs Congress’s goal of avoiding a regulatory patchwork; and impossibility preemption because a platform cannot simultaneously comply with state gambling licensing and CFTC “impartial access” requirements.19U.S. Court of Appeals for the Third Circuit. KalshiEX LLC v. Flaherty, No. 25-1922 On May 5, 2026, U.S. District Judge Michael Liburdi in Arizona issued a permanent injunction ending the state’s criminal prosecution of Kalshi on the same reasoning.20AZ Mirror. Arizona’s Criminal Case Against Kalshi Permanently Blocked by Federal Judge
Other courts have gone the other way. A Nevada district judge ruled that Kalshi’s event contracts are gambling subject to state regulation, and during Ninth Circuit oral argument on April 16, 2026, the panel appeared skeptical of the preemption argument. Judge Ryan Nelson questioned why the platforms had not sought CFTC approval for their specific contract types and said the companies had an “obligation” to function as regulatory gatekeepers.21Nevada Current. Ninth Circuit Panel Appears to Lean Nevada’s Way in Legal Battle With Kalshi, Crypto.com A Ninth Circuit ruling against the platforms would create a direct split with the Third Circuit and substantially raise the odds of Supreme Court review.22Holland & Knight. Federal Appeals Court Considers CFTC Jurisdiction Over Sports Event Contracts
The Fourth Circuit panel that heard Maryland’s Kalshi case on May 7, 2026, was equally skeptical of the platforms. Judge Roger Gregory said: “If it quacks, you know, it’s a duck, right? It’s gambling.” Judge Stephanie Thacker added: “This just seems like gambling.”23The Baltimore Sun. Maryland Kalshi Case Goes to Fourth Circuit
The Insider Trading Indictment
A separate criminal case has drawn attention to trading on the platform itself. On April 23, 2026, the U.S. Attorney’s Office for the Southern District of New York unsealed an indictment against Gannon Ken Van Dyke, a 38-year-old U.S. Army Master Sergeant stationed at Fort Bragg, North Carolina. Prosecutors allege Van Dyke used classified information about “Operation Absolute Resolve,” the U.S. military operation to capture Venezuelan President Nicolás Maduro, to profit on Polymarket.24U.S. Department of Justice. US Soldier Charged With Using Classified Information to Profit on Prediction Market Bets
Using the handle “Burdensome-Mix,” Van Dyke bought more than 436,000 “Yes” shares on the contract “Maduro Out by January 31, 2026?” between late December 2025 and early January 2026, according to the indictment. He invested roughly $33,000 and realized a profit of more than $400,000. After the January 3, 2026 operation, he allegedly asked that his Polymarket account be deleted and masked his cryptocurrency exchange credentials.25CFTC. CFTC Charges Army Service Member With Insider Trading in Event Contracts He faces three counts of violating the Commodity Exchange Act, one count of wire fraud, and one count of an unlawful monetary transaction, with potential sentences of up to 10 or 20 years each. The CFTC filed a parallel civil complaint the same day seeking disgorgement, restitution, penalties, and a permanent trading ban. The case is the first CFTC insider trading charge tied to event contracts and the first use of the so-called “Eddie Murphy Rule” to prosecute misuse of government information in this context. Polymarket itself is not a defendant.
Where the Litigation Stands
Polymarket remains operational in most of the United States under its CFTC designation but has been blocked by court order in Nevada. It faces active lawsuits from Wisconsin, Kentucky, Massachusetts, and New York regulators, along with the consumer class action in the Southern District of New York. The CFTC continues to assert exclusive jurisdiction and has filed or intervened in cases against at least five states. Courts are divided, and the Ninth Circuit’s forthcoming decision in the Nevada appeal is widely seen as the most consequential pending ruling.10Reuters. Betting Verdict in Kalshi Case Could Shape Prediction Markets Polymarket has said it intends to address the claims against it through “appropriate legal process.”9LPM. Kentucky Attorney General Sues Prediction Markets, Online Sweepstakes