Polymarket Files Suit Against New Mexico AG
Mike Goodpaster Published 07/07/2026
Polymarket has filed suit against New Mexico Attorney General Raúl Torrez and the state's Gaming Control Board in federal court. The prediction market site is seeking to block New Mexico's action against the sports-event contracts it offers. Polymarket's lawyers indicated that the suit was being filed because New Mexico had already filed suit against prediction market site Kalshi on similar grounds.
The suit is seeking federal preemption of state gambling law over Commodities Futures Trading Commission (CFTC)-regulated prediction markets. The CFTC is also suing New Mexico as part of this ongoing battle between federal and state regulators over who has control over prediction market sites.
Polymarket suit is taking pre-emptive action against New Mexico
Clearly, Polymarket is looking around at the landscape in how states are approaching their attacks on the legality of prediction market sports-event contracts. Michigan, for instance, recently won a temporary injunction forcing Kalsi to stop offering sports-event contracts in the state for two weeks. This small window of time is designed to offer the judge in the case a chance to further assess the situation. If Kalshi were to violate the injunction, the company would face daily fines of $120,000.
"The threat to Polymarket US is immediate," the suit reads. "On June 4, 2026, New Mexico sued another CFTC-designated contract market, Kalshi, on the theory that federally regulated event contract trading constitutes unlicensed online sports betting."
The suit also offers the potential to put the New Mexico Attorney General's office on its back foot. Facing suits from Kalshi, Polymarket, and the CFTC, the resources of the state AG's office figure to be spread fairly thin. From the viewpoint of the prediction market sites, battling the same opponent in multiple courts offers them the chance to shop around for the friendliest circuit.
Polymarket sought to broker a deal with New Mexico
Representatives of Polymarket reached out to New Mexico government officials. They were seeking to avoid, or at the very least, stay any legal action between the two sides.
Following that (Kalshi) suit, Polymarket US engaged in meet-and-confer discussions with the New Mexico Department of Justice (NMDOJ) in an effort to avoid unnecessary litigation," the suit reads. "On June 8, 2026, Polymarket US requested that New Mexico defer any enforcement action pending resolution of the Kalshi litigation.
"After the CFTC sued New Mexico, Polymarket US renewed that request on June 22, 2026, asking New Mexico to defer enforcement pending resolution of the CFTC’s motion for a preliminary injunction.
"On June 29, 2026, [the] NMDOJ rejected those proposals."
The prediction market site saw no alternative but to go on the offensive
Polymarket's legal team came to the belief that Torrez was itching for a fight. Ultimately, they decided to fire the first salvo.
"Defendant New Mexico Attorney General Raúl Torrez has also signed on to amicus briefs supporting other states’ efforts to enforce state gaming laws against CFTC-designated contract markets," the suit notes. "These actions demonstrate Defendants’ intent to use state law to shut down federally authorized markets despite clear federal preemption.
"Polymarket US therefore faces a real and imminent risk of enforcement, exposing it to civil penalties, potential criminal liability, forced cessation of operations within New Mexico, and severe collateral consequences to its nationwide operations."
They felt that by waiting, they would be risking any hope of a win in the future.
"The resulting harm of the State’s enforcement would be irreparable," Polymarket's lawyers argued. "Even a meritless state enforcement action would immediately disrupt Polymarket US’s federally authorized operations, fragment a national market, reduce liquidity, jeopardize critical banking and commercial relationships, undermine user trust, and harm New Mexico residents.
"Even the threat of enforcement forces Polymarket US to choose between exercising its federal right to operate nationwide or submitting to unlawful state coercion."