Columbus, OH – Prediction market operator Polymarket has filed a federal lawsuit against Ohio, alleging that the state’s sports betting regulations are both discriminatory and unconstitutional, and seeking an injunction against enforcement actions.
What Happened
Polymarket’s legal action comes in the wake of a cease-and-desist letter issued by Ohio’s gaming regulator to Polymarket and other prediction market operators earlier this month. The company argues that Ohio’s attempt to protect its online sports betting market through enforcement against prediction markets violates the U.S. Constitution’s Commerce Clause and is preempted by the Commodity Exchange Act (CEA). The complaint, filed on October 16, asserts that Ohio’s regulatory scheme, designed for in-state casinos, unlawfully demands Polymarket US’s nationwide exchange to conform to its rules. Polymarket has named Ohio Attorney General Andy Wilson and Ohio Casino Control Commission Executive Director Andromeda Morrison, among others, as defendants, requesting both preliminary and permanent injunctions against the state.
Key Details
- Polymarket claims Ohio’s actions violate the U.S. Constitution’s Commerce Clause.
- The lawsuit states that Ohio’s gaming rules are preempted by the Commodity Exchange Act (CEA).
- Ohio’s sports betting laws require wagering licenses only for approved applicants with an in-state physical presence.
- Polymarket argues that its operations would be limited to only those physically present in Ohio if it were to comply, cutting off access to the rest of the United States.
- The company asserts that these measures violate the Constitution’s promise of open, interstate commerce.
- Polymarket also reiterates the argument that the CEA grants the Commodity Futures Trading Commission (CFTC) sole regulatory authority over event contracts traded on CFTC-registered exchanges.
Why It Matters
This lawsuit represents a significant challenge to state-level regulation of prediction markets, particularly in states with established sports betting markets. Polymarket’s argument for federal preemption under the CEA, combined with claims of unconstitutional discrimination against interstate commerce, could set a precedent for how prediction markets are regulated nationwide. Gaming attorney Joshua Kirschner, a partner at Holland & Knight, notes that while the language of discrimination and unconstitutionality is strong, Polymarket’s core argument is that an intrastate sports betting regime should not be applied to interstate commodities activity properly regulated by the CEA. The outcome of this case could impact the future regulatory landscape for prediction markets and the balance of power between state gaming commissions and federal commodities regulators.
Imported source
- Action Networkwww.actionnetwork.com/education/tracking-prediction-market-lawsuits from Action Network (opens in a new tab)actionnetwork.com