New York state has filed a lawsuit against Polymarket for alleged illegal gambling, seeking to prohibit its operations and impose penalties.
The New York state government has initiated legal action against Polymarket US, claiming the platform is engaged in unlicensed gambling. Attorney General Letitia James is pursuing a court order to prevent the company from operating in New York without the necessary licenses, seeking restitution for users and imposing penalties.
QCX LLC, operating as Polymarket US, is the defendant in this case. While it is registered with the U.S. Commodity Futures Trading Commission (CFTC) as a designated contract market, the lawsuit argues that its offerings qualify as gambling under state law, as users are betting on outcomes beyond their control without a state Gaming Commission license.
Additionally, the lawsuit highlights that Polymarket permits users aged 18 to 20 to access its services, contrary to state regulations that require participants in mobile sports betting to be at least 21 years old.
The state's legal action seeks to compel Polymarket to reveal data on its contracts and customer losses, confiscate any illegal revenues, and mandate compensation to users. Furthermore, authorities are pursuing fines that could total three times the profits from the alleged violations, along with penalties of up to $100,000 for each unauthorized sports contract.
Polymarket's Counteraction
In response to the lawsuit, Polymarket filed a counterclaim in federal court in Manhattan against New York's Attorney General and other officials. The company argues that its markets fall under the exclusive jurisdiction of the CFTC, asserting that state gambling laws should not apply.
Polymarket is requesting the court to prevent New York from enforcing its civil and criminal gambling laws against them, claiming the state's actions force the company to choose between complying with local regulations and exercising its federally licensed operations across the country.
Earlier in June, Kentucky officials had similarly accused Polymarket of conducting unlicensed gambling with its sports contracts. A federal court in Michigan had previously dismissed Polymarket's efforts to avoid state regulations, while an appellate court provided temporary protection to Kalshi from New Jersey's regulatory actions in a different case.
Moreover, in August, the New York City Council began investigating the marketing practices of Polymarket and Kalshi, with concerns raised over their targeting of young audiences, influencer payments, and instances of misleading marketing portraying profitable trades.
Polymarket had re-entered the U.S. market in late 2025 after acquiring QCX and settling a prior dispute with the CFTC, operating the American service independently from its international counterpart.
