Polymarket has filed a lawsuit amid claims the betting platform is in violation of gambling laws. In a lawsuit filed on Thursday, New York State Attorney General Letitia James said that Polymarket has been operating as an unlicensed gambling operation due to its failure to obtain a licence from the New York State Gaming Commission.

Polymarket filed a countersuit hours later, arguing the federal Commodity Futures Trading Commission has exclusive authority to regulate prediction markets.

The betting platform said New York had left it with an “impossible choice” between obeying state regulators, or continuing operations and facing potentially “huge” criminal liability.

“This is an extraordinary assertion of state power squarely foreclosed by federal law,” Polymarket said in its lawsuit in Manhattan federal court.

Chief Legal Officer Neal Kumar said Polymarket tried to work out its differences with state officials, but “they preferred the media hit”. We chose to engage with them directly on the substance and address their concerns, Kumar said.