New York Sues Polymarket, Alleges Illegal Gambling Operation

New York is seeking to prevent Polymarket from operating in the state without a gambling license and recover what officials describe as illegally obtained proceeds.

New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit Thursday against QCX LLC, Polymarket’s U.S. business, accusing the prediction market platform of operating an illegal gambling service in the state.

The complaint asks the court to bar Polymarket US from continuing operations in New York without a state gambling license. Officials are also seeking the forfeiture of allegedly illegal proceeds, restitution for customers and penalties equal to three times the gains the state says the company obtained.

Polymarket launched its U.S. platform in December 2025, initially offering contracts tied to sporting event outcomes. The company said when it relaunched that it intended to introduce additional categories of prediction markets.

New York contends that these contracts qualify as gambling under state law because customers risk money on uncertain future events. The state also alleges that Polymarket permits users between 18 and 20 years old to participate, despite New York’s requirement that users be at least 21 to place mobile sports bets.

A Polymarket representative had not immediately responded to a request for comment.

The lawsuit comes amid a broader dispute between prediction market operators and state gambling authorities over which regulators have jurisdiction over event contracts.

Prediction market firms maintain that their contracts are financial products regulated federally by the Commodity Futures Trading Commission (CFTC). State regulators, particularly in cases involving sports-related contracts, have argued that these products function as wagers and therefore fall under state gambling laws.

New York has emerged as an active participant in the regulatory dispute. The state sued Kalshi in July after talks between the company and Hochul’s administration failed, seeking up to $36 billion in penalties and disgorgement. Several disputes involving prediction markets and state regulators have moved through appeals courts, while a recent legal battle between Kalshi and New Jersey has reached an appeal before the U.S. Supreme Court.

“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” James said in a statement.

The latest lawsuit was filed less than a year after Polymarket reentered the U.S. market.