Polymarket’s US domestic wing, QCX LLC, has filed a lawsuit against New Mexico, accusing the state of enforcing its gambling laws on products that are federally regulated as derivatives exchanges under the CFTC.
The front page of the June 30th filing, uploaded to X by Mick Bransfield of Kingston Chase Consulting, asks the US District Court for the District of New Mexico (Albuquerque) to provide Polymarket with injunctive relief from civil enforcement actions that the state has taken against prediction platforms.
“This action seeks to prevent imminent and irreparable harm arising from New Mexico’s enforcement of state gambling laws against federally regulated derivatives exchanges-enforcement Congress has expressly prohibited,” reads the first page of the lawsuit.
“Polymarket US operates a lawful, nationwide designated contract market subject to the exclusive jurisdiction of the Commodity Futures Trading Commission. Through the Commodity Exchange Act, Congress vested the CFTC with sole regulatory authority over event contracts and other derivatives traded on designated contract markets.”
New Mexico has become an area of intense focus for legal actions that relate to prediction markets. On June 12th, the CFTC announced its own lawsuit against the state a few days after New Mexico took legal action against Kalshi.
In May of this year, four New Mexico tribes sued Kalshi over the platform’s sports-related prediction markets, arguing that the exchange is bypassing exclusive gaming rights extended by the Indian Gaming Regulatory Act of 1988. The legal actions have been filed in a combination of state and federal courts, meaning that they will be heard separately by corresponding panels of judges who oversee each jurisdiction.
The Polymarket US division, identified as QCX LLC, has filed separate lawsuits against the states of Massachusetts (February 2026), Michigan (March 2026), and Minnesota (June 2026). Those legal complaints likewise seek to halt state gambling law enforcement against prediction markets.
The CFTC has pending litigation against nine US jurisdictions that it is actively suing, while Kalshi faces a temporary restraining order in Michigan, and Minnesota prepares to enact its criminal enforcement against prediction exchanges starting August 1st.
If current trends hold, one or more lawsuits that involve the categorization and oversight of prediction market products will arrive before the US Supreme Court in 2027 or 2028. Until that time, the legal complaints will need to be heard in their respective jurisdictions.
Despite numerous legal challenges initiated by states and tribes, prediction market popularity is at an all-time high. Kalshi currently enjoys a user base that exceeds 2 million active members, with trading volume in the billions for individual markets including the 2026 World Cup winner.
States and tribes that are pursuing legal action against prediction markets believe that trades on sports-related outcomes are actually sports bets disguised as event contracts. Kalshi, Polymarket, and other exchanges cite the CFTC’s official stance that the federal agency enjoys exclusive jurisdiction over prediction markets, therefore making the exchanges exempt from state and tribal gambling regulations.
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