Polymarket Illegal Sports Betting Class Action Filed—Platform Accused Of Operating Unlicensed “Payday-Style” Gambling Under Guise Of “Prediction Market”
A class action lawsuit filed February 4, 2026, in the Southern District of New York claims that Polymarket’s “prediction market” platform is, in reality, an unlicensed sports betting enterprise not governed by state and federal regulations designed to protect consumers. If you placed bets on Polymarket thinking it was a legal platform, you may have unknowingly participated in illegal gambling operations that violated state anti-gambling laws across all 50 states.
The 46-page lawsuit contends that although Polymarket markets itself as a “predictions market” where users wager on various events including sports, the platform operates “virtually indistinguishably” from any typical online casino and sportsbook since users wager with real-world currency.
The Allegations: “Data-Theft” Rebranding As Legal Prediction Platform
The filing claims that Polymarket has falsely described its prediction market as a way to sidestep regulatory scrutiny, routinely misrepresenting its product and repeatedly misleading consumers to “mask the reality that the platform facilitates and profits from” illegal sports gambling.
Plaintiff Lorenzo Miro, a San Diego resident who allegedly lost thousands betting on sports on the predictions platform under the belief that it was legal, filed the class action lawsuit on behalf of anyone nationwide who spent money wagering on Polymarket’s mobile or web sportsbook.
Similar to controversies surrounding the Apple, Google, And Meta Face Casino-Style Gambling App Lawsuits, Polymarket allegedly exploits a technical loophole by branding gambling as something else—in this case, “prediction contracts” instead of sports bets.
How Polymarket Allegedly Evades Gambling Laws
Per the complaint, the main difference between the Polymarket platform and any other sportsbook is that the wagers consumers place through Polymarket are considered “event contracts,” effectively an agreement of payment contingent upon whether an event actually occurs.
The filing explains that Polymarket claims its event contracts are akin to owning a share in an economic hedging function, where the company only profits from transaction fees and not customer losses. But the lawsuit argues this distinction is purely cosmetic.
“Polymarket has expressly repositioned itself as a nationwide sportsbook (at least for now), open to users in all 50 states, while consciously operating without the state licensure required to offer sports betting,” write San Diego’s attorneys in the complaint. “In so doing, Polymarket knowingly and blatantly defies applicable state anti-gambling laws.”
What Makes This Sports Betting, Not Predictions
The lawsuit takes issue with Polymarket’s alleged noncompliance with state-specific and federal gambling laws designed to ensure fairness, transparency, and consumer protection. The case argues that Polymarket has not only violated New York gambling protection laws but also gambling safeguards in other states.
“By presenting its sports betting platform as lawful and accessible, Polymarket exposes consumers to financial risk while evading the regulatory and statutory safeguards intended to protect them,” the complaint states.
The Polymarket platform functions exactly like sports betting because:
- Users wager real money on sports outcomes
- Winnings are paid in real currency
- The platform profits from transaction volume
- Bets are placed on specific sporting events with defined outcomes
- Users can lose their entire investment
The only difference? Polymarket calls them “event contracts” instead of “bets.”
The Scale Of Polymarket’s Alleged Operations
The complaint claims this designation allows the company to evade traditional sports gambling laws, even though Polymarket allegedly collects a “substantial portion” of its multi-billion dollar revenue through wagers placed on sports.
For context, for the 2025 Super Bowl, it is estimated that more than $1.39 billion was wagered on the outcome. Approximately $152 million was bet in the State of Nevada. Polymarket captured significant market share of this betting volume—all allegedly without the licensing required of legal sportsbooks.
“Defendants’ conduct … is designed to encourage illegal gambling while marketing the platform as a legal avenue to engage in sports betting, as well as to exploit psychological triggers associated with gambling and addiction in order to target susceptible populations,” the suit asserts.
Regulatory Crackdown Intensifies Across Multiple States
The class action follows a wave of state enforcement actions:
Nevada: The State Gaming Control Board won a temporary restraining order blocking Polymarket from offering event-based contracts in Nevada for two weeks after finding the platform violated Nevada gaming law. The restraining order expires February 12 and blocks users from betting on the Super Bowl, with a hearing scheduled for February 11.
Illinois: The Illinois Gaming Board issued a cease-and-desist targeting Polymarket at the end of January 2026.
Arizona: Attorney General Kris Mayes warned residents against “unregulated prediction markets” in advance of the Super Bowl, stating: “Illegal sportsbooks may lack testing to ensure compliance with regulatory standards designed to guarantee fair play, oversight to ensure consumers are paid their winnings, security standards to protect personal and financial information, and/or compliance with anti-money laundering law.”
Massachusetts: Polymarket’s U.S. business sued Massachusetts’ Attorney General and gaming regulator in federal court over its sports event contracts.
Tennessee: In January, the Tennessee Sports Wagering Council ordered Polymarket to stop offering sports contracts, void existing trades, and refund users by January 31.
Who Can Join This Nationwide Class Action
The Polymarket class action lawsuit looks to represent all United States residents who spent money wagering on Polymarket’s mobile or web sportsbook during the applicable statute of limitations.
You may be eligible if you:
- Placed bets (or “event contracts”) on Polymarket’s platform
- Wagered on sports outcomes through Polymarket
- Lost money on the platform believing it was legal
- Are a U.S. resident who used Polymarket
No settlement exists yet, and no claim forms are available. This lawsuit was just filed February 4, 2026, and is in early litigation stages.
What Compensation May Be Available
While no settlement has been reached, similar illegal gambling lawsuits have resulted in:
- Full refunds of money lost through illegal gambling platforms
- Statutory damages for violations of consumer protection laws
- Restitution of fees and transaction costs
- Injunctive relief forcing platforms to cease illegal operations
The case is seeking a jury trial, meaning actual damages could be determined by jurors who evaluate the scope of Polymarket’s allegedly illegal operations.
Polymarket’s Defense: Federal Preemption
In its filing against Massachusetts, Polymarket claimed that the Commodity Exchange Act (CEA) grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over derivatives traded on designated contract markets and expressly preempts state laws attempting to regulate or prohibit such trading.
Polymarket relaunched in the U.S. in late 2025 after acquiring CFTC-licensed designated contract market (DCM) QCX and its associated designated clearing organization (DCO) QC Clearing LLC. QCX now does business as Polymarket US.
However, plaintiffs argue this CFTC licensing doesn’t shield Polymarket from state gambling laws designed to protect consumers from unlicensed sports betting operations.
Additional Lawsuit: California Resident Claims Deception
Alexander Yoon, a California resident, filed a separate lawsuit against Polymarket in February 2026, claiming the site deceived him into believing California had legalized online sports betting. Yoon set up an account in December and lost $5,000 wagering on the platform.
The lawsuit states: “If Polymarket had honestly and accurately disclosed the unlawful nature of its gambling operations in California, Plaintiff would not have created an account with Polymarket in California and would not have placed bets while in California through Polymarket’s gambling website.”
One claim in the lawsuit is that Polymarket is not a peer-to-peer exchange as claimed, but rather acts like a sportsbook with users wagering against the house. Polymarket has allegedly been recruiting traders for an in-house market-making team that would essentially operate like a sportsbook, taking positions against users.
What You Should Do Now
If you used Polymarket and lost money:
Document everything. Save:
- Account statements showing deposits and withdrawals
- Transaction records of bets placed
- Screenshots of promotional materials claiming Polymarket was legal
- Communications with Polymarket customer service
- Evidence of how you accessed the platform (app download, website)
Calculate your losses. Add up all money deposited minus any withdrawals received. This represents your potential damages claim.
Do not delete your account. Preserve all evidence of your Polymarket activity for potential litigation.
Report to your state attorney general. Many states are investigating Polymarket. Your complaint creates an official record of consumer harm.
Frequently Asked Questions
What is the Polymarket illegal sports betting lawsuit about?
The February 4, 2026, class action alleges Polymarket operates an unlicensed sports betting platform disguised as a “prediction market,” violating state gambling laws nationwide by allowing users to wager on sports without proper licensing or consumer protections.
Am I eligible to join the class action?
Yes, if you’re a U.S. resident who spent money wagering on Polymarket’s mobile or web platform. Both winners and losers may qualify—the lawsuit challenges the platform’s legality, not individual bet outcomes.
Is there a deadline to file a claim?
No claim form exists yet since the lawsuit was just filed. Class certification typically takes 12-18 months. Save your documentation now to support future claims.
Will I get my losses refunded?
Potential remedies haven’t been determined. Similar illegal gambling cases have resulted in full refunds of money lost, though final compensation depends on settlement negotiations or jury verdicts.
Can I still use Polymarket?
Multiple states have ordered Polymarket to cease operations. Using the platform may constitute participation in illegal gambling depending on your state’s laws. Consult your state attorney general’s guidance.
Last Updated: February 15, 2026
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For guidance on your specific situation, consult with a qualified attorney.
Know your rights: When platforms rebrand illegal gambling as “prediction markets” to evade consumer protection laws, understanding the legal difference protects both your money and your rights.
Stay informed, stay protected. — AllAboutLawyer.com
About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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