February 7, 2026 NEW YORK, NY For months, Polymarket has been the darling of the crypto world, billed as a high-tech "prediction market" where the wisdom of the crowd meets the blockchain. But according to a blistering new class-action lawsuit filed in the Southern District of New York, the platform’s "prediction" label is nothing more than a high-stakes masquerade.

The allegation? Polymarket isn't just a tech platform—it's an unregulated, nationwide sportsbook operating right under the nose of New York regulators.

The "Cosmetic" Mask Pulled Off

The lawsuit, spearheaded by California resident Lorenzo Miro San Diego, pulls no punches. San Diego claims he lost thousands of dollars on the platform, believing it was a fully legal and regulated entity. His attorneys argue that Polymarket has "knowingly and blatantly" defied state laws to capture a massive slice of the gambling pie.

"Polymarket’s status as a predictions market is purely cosmetic," the complaint reads. The lawyers argue that when you look at the numbers, the platform functions exactly like a traditional bookie:

• $6 Billion+: The estimated volume of sports-related contracts on the platform.

• Traditional Wagering: Users can bet on point spreads and over/under totals—features indistinguishable from those offered by licensed giants like FanDuel or DraftKings.

• 50-State Reach: The suit alleges Polymarket consciously avoids the state licensure required to protect consumers.

A Regulatory Storm Gathers

This isn't just one disgruntled bettor's crusade. Polymarket is currently facing a "wall of resistance" from regulators across the country who are tired of the "prediction market" loophole:

Why This Matters to You

Since New York legalized mobile sports betting in 2022, only nine operators have been granted the right to take your bets. These companies pay massive fees and follow strict rules designed to ensure payouts and prevent fraud.

If the court agrees with San Diego, Polymarket has essentially been "cutting the line," offering the thrills of a sportsbook without the oversight that keeps the public safe. For the plaintiffs, this isn't about the "wisdom of the crowd"—it's about an illegal house always winning while operating from a Manhattan headquarters.

The "All-In" Class Action

The lawsuit isn't just for San Diego. It has been filed on behalf of anyone nationwide who has wagered money on Polymarket’s mobile or web platform. If successful, it could trigger a massive payout and force a total shutdown of the platform's sports offerings.

As the legal battle heats up, the question remains: Is this the end of the "prediction market" loophole, or can crypto stay one step ahead of the law?