New Mexico now sits near the center of the US prediction market fight, with Polymarket asking a federal court to block state gambling enforcement before any penalty action begins.
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Polymarket has asked the U.S. District Court of New Mexico for a declaratory judgment, plus preliminary and permanent injunctions. The company wants the court to confirm that New Mexico cannot use state gambling law to stop sports and event contracts that Polymarket says fall under federal commodities law.
The filing names Raul Torrez and six members of the New Mexico gaming control board. Polymarket says enforcement would cause “irreparable harm” by damaging liquidity, banking ties, commercial relationships, and user trust.
“The chilling effect on lawful activity and the deprivation of New Mexico residents’ access to a federally regulated exchange is precisely the harm Congress sought to prevent when it vested the CFTC with sole regulatory authority over derivatives traded on designated contract markets,” Polymarket wrote.
New Mexico has already taken aim at Kalshi. Torrez sued Kalshi on June 4, arguing that sports contracts violated state gambling laws. The CFTC answered on June 12 with its own lawsuit against New Mexico, saying only the federal agency can police prediction markets.
Polymarket says it tried to avoid another court fight. The company met with the New Mexico Department of Justice after the Kalshi lawsuit and asked on June 8 for any penalty action to wait until that case ended. It renewed the request on June 22 after the CFTC lawsuit. New Mexico rejected the requests on June 29.
Torrez also signed an amicus brief backing state gaming enforcement. Polymarket treated that as a direct warning.
“These actions demonstrate Defendants’ intent to use state law to shut down federally authorized markets despite clear federal preemption,” Polymarket wrote. “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.”
The New Mexico case adds another test for prediction market operators that frame sports contracts as regulated event derivatives, while states view the same products as unlicensed sports betting. For Polymarket, the lawsuit asks the court to answer that question before New Mexico can act.
Polymarket sued to block possible state enforcement over sports and event contracts that it says fall under CFTC authority.
The lawsuit names New Mexico Attorney General Raul Torrez and six members of the state gaming control board.
New Mexico sued Kalshi on June 4 over sports prediction contracts. The CFTC then sued New Mexico on June 12, arguing for exclusive federal authority.
Polymarket wants a declaratory judgment and injunctions that stop New Mexico from enforcing state gambling laws against its federally regulated markets.