Class Action Lawsuit Calls Polymarket Illegal Sports Betting Site

Polymarket lawsuit alleges that event contracts operate as unlicensed sports bets in violation of state gambling laws, despite the platform advertising itself as being “legal in all 50 states.”

A new class action lawsuit alleges that the online platform Polymarket is operating as an illegal sports betting website nationwide, disguising traditional wagers on games and player performance as so-called “event contracts” in an effort to avoid state gambling laws.

The complaint (PDF) was filed by Alexander Yoon in the U.S. District Court for the Southern District of New York on February 11, seeking to represent a nationwide class of individuals who allegedly lost money placing bets through the Polymarket platform. The lawsuit names Blockratize Inc., QCX LLC, Adventure One QSS Inc., QC Clearing LLC, QC Tech LLC and related entities all doing business as Polymarket as defendants.

Polymarket is a website that refers to itself as the “World’s Largest Prediction Market,” allowing users to buy and sell “Yes” or “No” shares tied to the outcome of sporting events. However, Yoon contends that the platform is “nearly indistinguishable from a traditional online sports betting website,” offering money lines, spreads, totals, proposition bets and parlays on professional and college sports.

Sports betting sites like Draft Kings, FanDuel, BetMGM, Caesars and others have come under increased scrutiny in recent years, following allegations that these platforms specifically target younger users with “risk-free” bets, limited-time bonuses and gamified features that mimic mobile games. Critics also claim the platforms were specifically designed to encourage repetitive use, impulsive betting and prolonged engagement.

As a result, numerous sports betting addiction lawsuits have been brought by individuals who developed compulsive gambling habits after using these kinds of sports betting apps. Claims allege that companies like FanDuel, DraftKings and others have engaged in deceptive marketing tactics and designed addictive platforms that have led users, especially students and young adults, into severe financial and emotional distress.

There are now a growing number of entities like Polymarket that are allegedly engaging in similar tactics, but attempting to avoid the state-by-state regulations placed on sportsbooks.

Polymarket Gambling Allegations

Yoon, a California resident, alleges he opened a Polymarket account in December 2024 after seeing advertisements that described the platform as legal. According to the complaint, he deposited funds and lost approximately $5,000, and was unable to withdraw another $5,000 in prior winnings. He claims he would not have placed the wagers had he known the services were unlawful.

The lawsuit says Polymarket allows users to fund accounts using cryptocurrency, credit or debit cards, or bank transfers, and then purchase “event contracts” tied to sports outcomes, including game winners and player statistics. Each winning contract pays $1 if the selected outcome occurs, while losing positions expire worthless.

Yoon contends those event contracts operate no differently than traditional sports bets and violate state gambling laws that either prohibit unlicensed wagering or allow players to recover unlawful gambling losses. The complaint also points to Polymarket’s marketing statements that users can “trade legally in all 50 states,” including promotions on social media and app platforms.

The complaint emphasizes that sports betting is regulated at the state level and alleges Polymarket lacks required licenses in multiple jurisdictions where it accepts wagers. It also cites a February 2 consumer alert issued by New York Attorney General Letitia James warning that certain prediction markets operate without the consumer protections required of regulated sportsbooks.

“Polymarket’s conduct was fraudulent because, among other reasons and as otherwise detailed in this Complaint, Polymarket intentionally misrepresented and concealed the true nature of its unlawful gambling enterprise from Plaintiff and the Class by affirmatively representing that the Gambling Website and associated contests were legal when Polymarket knew (or should have known) that such contests were not.”

— Alexander Yoon v. Blockratize Inc. et al

Beyond the alleged misrepresentations, the lawsuit challenges how the platform is structured and marketed. Yoon claims Polymarket encourages rapid, repeated wagering through real-time odds updates, leaderboard features, countdown timers and prompts suggesting additional trades. The complaint also alleges the company failed to implement safeguards commonly required of licensed sportsbooks, including robust age verification, geolocation controls, self-exclusion tools and responsible gambling resources.

The complaint asserts claims for unjust enrichment and violations of New York’s General Obligations Law and General Business Law, as well as California’s Unfair Competition Law and Consumer Legal Remedies Act.

Yoon seeks to represent a nationwide class of individuals who lost money betting on Polymarket, along with subclasses for residents of New York, California and other states that allow recovery of unlawful gambling losses. The lawsuit requests restitution of losses, disgorgement of profits, statutory and punitive damages and injunctive relief barring Polymarket from continuing the alleged practices.

Sports Betting Lawsuits

The Polymarket complaint is filed against the backdrop of a growing wave of gambling addiction lawsuits, much of which has targeted major sportsbook operators such as FanDuel and DraftKings.

Lawsuits generally allege that young adults, particularly college-age users, were encouraged to engage in high-frequency wagering even after exhibiting signs of compulsive behavior. Plaintiffs further claim that some users continued to receive targeted promotions, financial incentives and marketing communications after requesting account closures or enrolling in self-exclusion programs, raising questions about whether certain platform practices exploit vulnerable individuals.

Individuals who experienced significant financial losses allegedly tied to compulsive gambling on these platforms can contact a sports gambling lawyer to determine whether they have viable claims to recover losses and pursue accountability for allegedly addictive design features or targeted marketing practices.

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