California Resident Sues Polymarket, Alleging Platform Tricked Him That State Legalized Sports Betting

Alexander Yoon, a resident of California, has filed a lawsuit against the prediction market platform Polymarket, claiming the site deceived him into believing the state had legalized online sports betting.

Yoon set up an account on Polymarket in December, then lost $5,000 wagering on the platform. He claims that he only set up the account as he believed Polymarket was offering legal sports betting in the state, as it had advertised.

The lawsuit cites a CasinoBeats article that highlighted the ads Polymarket ran in the build-up to its US relaunch. One ad, seen on social media platforms, including Facebook, ran with the tagline, “BIG NEWS California. Trading on football will be LEGAL this fall.”

However, Yoon (or, more accurately, his legal team) argues that this is, in fact, false, as Polymarket operates an unlicensed sports betting platform. The court filing details California law, which prohibits online sports betting.

Polymarket has been approved for trading in California and other US states. It has been forced to withdraw from Nevada following an adverse court ruling, but has received no such judgment in California.

Fool Me Once, Shame On You, Fool Me Twice?

The lawsuit, filed in the Southern District of New York, states, “If Polymarket had honestly and accurately disclosed the unlawful nature of its gambling operations in California, Plaintiff would not have created an account with Polymarket in California and would not have placed bets while in California through Polymarket’s gambling website.”

Yoon says he has stopped using Polymarket, but says he “may be tricked by Polymarket in the future into engaging in unlawful gambling in California if Polymarket continues to claim that its practices are legal.”

Lawsuit Alleges Polymarket Acts as House

One of the other claims in the lawsuit is that Polymarket is not a peer-to-peer exchange as claimed, but rather it acts like a sportsbook with users wagering against the house. It states, “In Plaintiff’s experience, Polymarket serves as the ‘house,’ setting the betting lines, taking bets and wagers from all users, documenting (i.e., ‘booking’) those bets, using its records to determine ‘winners’ and ‘losers,’ and eventually paying out the winners.”

Polymarket has allegedly been recruiting traders for an in-house market-making team that would essentially operate like a sportsbook, taking positions against users.

A similar accusation has been leveled at Kalshi, which the company denied. The company does have an affiliated trading arm, Kalshi Trading, but says it functions the same as any other user or market-maker and receives no preferential treatment in accessing markets.

Latest in Long Line of Lawsuits

Yoon is seeking damages for the money he lost, as well as for others in similar situations across the country. Like previous lawsuits against rival operator Kalshi, the claim also references the Statute of Anne, an 18th-century British law that entitles a losing party to sue a winning party to recover losses from illegal gambling.

A group identified as Gambling Recovery LLC has filed lawsuits in seven states against Kalshi, citing the Statute of Anne. Illinois attorney Mark T. Lavery, who has described himself as a “bounty hunter” of gambling statutes, has also filed claims citing the law against Kalshi and Coinbase, as well as sweepstakes casino operators.

In addition, three class actions have been brought against Kalshi in New York. The latest claim against Polymarket is a second class-action lawsuit filed in New York.

These are only the lawsuits brought by individuals or user groups, while state gambling regulators have also brought numerous legal actions against prediction markets.

In total, there are now at least 30 active court cases involving prediction market platforms. Kalshi is involved in the majority, but since relaunching in the US, Polymarket has also become a target.

The act of suing gambling companies is nothing new, and it could be argued that it is also a form of gambling as lawyers bet on receiving compensation for clients. One individual who joined a lawsuit against Kalshi said he only wanted to make a “quick buck,” but withdrew after his name was published in the press.