Polymarket has initiated a lawsuit against New Mexico Attorney General Raul Torrez and six members of the state’s gaming control board, asserting that any enforcement action would lead to “irreparable harm.”

The prediction market operator is seeking a declaratory judgment from the U.S. District Court of New Mexico, contending that state law cannot override federal law. Additionally, it is requesting both preliminary and permanent injunctions to prevent New Mexico from taking action against Polymarket for offering sports and event contracts within the state.

Polymarket, similar to its competitor Kalshi, argues that only the Commodity Futures Trading Commission (CFTC) possesses the authority to regulate and sanction prediction market platforms. They maintain that their operations are in compliance with federal law in New Mexico.

In its lawsuit, Polymarket emphasizes that even a baseless enforcement action by New Mexico could harm the market, disrupt liquidity, negatively impact banking and commercial relationships, and erode trust among users in the state.

“The lawful activity and the denial of access for New Mexico residents to a federally regulated exchange is exactly the harm Congress aimed to prevent by granting the CFTC exclusive regulatory authority over derivatives traded on designated contract markets,” Polymarket stated in its court filing.