The New York state government has filed a lawsuit against Polymarket US, accusing the platform of operating unlicensed gambling activities. Attorney General Letitia James is seeking to prohibit the company from operating in the state without the proper licensing, reimburse affected users, and impose penalties.
The defendant in the lawsuit is QCX LLC, which operates under the Polymarket US brand. The company is registered with the U.S. Commodity Futures Trading Commission (CFTC) as a designated contract market, a regulated venue for trading derivatives.
According to the prosecution, the contracts offered by Polymarket fall under the local definition of gambling, as users risk money on the outcomes of events beyond their control. Furthermore, the company has not obtained a license from the state's Gaming Commission.
The lawsuit also points out that Polymarket allows individuals aged 18 to 20 to access its services, while state law mandates a minimum age of 21 for mobile sports betting.
The prosecution is asking the court to compel the platform to disclose data on contracts and customer losses, seize revenues deemed illegal, and provide compensation. Authorities are also demanding a fine amounting to three times the profits gained from the alleged violations, along with up to $100,000 for each unauthorized sports contract offer.
Polymarket Files Counterclaim
Shortly after the lawsuit was filed, Polymarket responded by submitting a counterclaim in federal court in Manhattan against the New York Attorney General and other state officials. The company argues that the exclusive oversight of its markets lies with the CFTC, and local gambling laws should not apply in this case.
Polymarket is requesting the court to prohibit the state from enforcing civil and criminal gambling laws against the platform. The company contends that New York's demands force it to choose between adhering to local restrictions and exercising its right to operate under a federal license across the United States.
In June, Kentucky authorities leveled accusations against the prediction market platform, asserting that sports contracts constitute unlicensed gambling activities.
A federal court in Michigan previously rejected Polymarket's attempt to block state-level regulations, while an appellate court temporarily protected Kalshi from actions by New Jersey authorities in a separate dispute.
In August, the New York City Council initiated a separate review of the marketing practices of Polymarket and Kalshi. Legislators expressed concern over the platforms' advertising aimed at youth, influencer payouts, and instances of staged videos mimicking profitable trades.
Notably, Polymarket returned to the U.S. market in late 2025 after acquiring QCX and resolving a prior dispute with the CFTC. The American version of the service operates independently from the international platform.