New York has filed a lawsuit against Polymarket, alleging it operates illegally without a gambling license and seeks to recover profits.
New York seeks to stop Polymarket's operations for lacking a gambling license and aims to recover alleged illegal earnings.
New York's Attorney General Letitia James and Governor Kathy Hochul have filed a lawsuit against Polymarket, claiming the company's prediction market operates as an unlicensed gambling entity in the state.
The legal action targets QCX LLC, which runs Polymarket US, and seeks a court order to bar the company from operating in New York without the required gambling license. The state is also pursuing restitution for customers and financial penalties that could total three times the claimed illegal profits.
Polymarket launched its U.S. platform in December 2025, allowing users to bet on the outcomes of sporting events. The platform is reportedly looking to expand its offerings.
New York officials argue that the contracts available on Polymarket qualify as gambling under state law due to the uncertainty of the outcomes. They also pointed out that the platform allows users aged 18 to 20 to participate, while state regulations mandate that participants in mobile sports betting be at least 21.
A representative from Polymarket has not yet responded to requests for comment regarding the lawsuit.
This legal action is part of a broader struggle between state regulators and prediction markets over the appropriate regulatory framework. While companies in the prediction market sector assert that their contracts are financial instruments subject to federal regulation by the Commodity Futures Trading Commission (CFTC), states view many of these contracts, especially those linked to sports, as bets that must comply with state gambling laws.
New York has been actively engaged in this regulatory dispute, having previously sued Kalshi in July after negotiations failed. The state is seeking up to $36 billion in penalties and the return of profits in that case, which has also reached appeals courts and may involve the U.S. Supreme Court.
James emphasized the importance of gambling laws, stating they are designed to protect New Yorkers and ensure funding for educational and public benefit programs. This latest lawsuit comes less than a year after Polymarket re-entered the U.S. market.
