New York Attorney General Letitia James and Governor Kathy Hochul initiated a lawsuit on Thursday against the crypto-based prediction market Polymarket, alleging that the platform operates an unlicensed gambling business within the state.
Following an investigation, the Attorney General’s office determined that these markets satisfy New York’s legal definition of gambling since participants risk money on uncertain events beyond their control.
The complaint states that Polymarket failed to acquire a license from the New York State Gaming Commission, thereby bypassing taxes required of authorized casinos and mobile sportsbooks. These tax revenues support public schools, youth sports initiatives, and problem gambling treatment.
This legal action arrives while regulatory bodies, including the Securities and Exchange Commission and the Commodity Futures Trading Commission, seek to oversee crypto-driven prediction markets.
Both Polymarket and competitor Kalshi contend they operate as federally regulated exchanges providing “event contracts”—a form of derivative—rather than gambling websites. This classification, they argue, places them under the jurisdiction of the Commodity Futures Trading Commission instead of state gaming regulations.
Supporting this stance, the CFTC has aligned with the platforms and filed a lawsuit against nine states in 2026, asserting that it maintains exclusive nationwide authority over the sector.
Additionally, Thursday’s filing points out that the platform allows users aged 18 to 20 to participate, whereas New York mandates a minimum age of 21 for mobile sports betting.
“By skirting New York’s laws, Polymarket is targeting the most vulnerable,” James stated. Hochul noted that the firm had “knowingly” breached state regulations and endangered underage users.
The state requests a court order prohibiting Polymarket from functioning as an unlicensed gambling enterprise in New York. Furthermore, the state seeks the forfeiture of the company’s unlawful profits, restitution for affected users, and penalties totaling three times those illicit gains.
This legal challenge represents the newest move in a series of enforcement actions by New York against gambling-adjacent platforms. James and Hochul previously sued competing prediction market Kalshi in July, while James took legal action against Coinbase and Gemini in April regarding comparable allegations. Earlier in the month, James obtained $8 million from the primary operator of sweepstakes casinos.
Polymarket debuted in the United States in December 2025, initially enabling users to wager on sporting events with intentions to broaden its offerings into markets covering diverse subjects.
Frequently Asked Questions
Why is New York suing Polymarket?
New York Attorney General Letitia James and Governor Kathy Hochul allege that Polymarket is running an unlicensed gambling operation in the state without paying required taxes.
What defense do Polymarket and Kalshi use?
They argue they are federally regulated exchanges offering “event contracts” under the Commodity Futures Trading Commission, rather than traditional gambling sites.
What penalties is New York seeking against Polymarket?
The state wants to bar Polymarket from operating without a license, force the company to forfeit illegal gains, repay harmed users, and pay fines equal to three times those gains.
What is the age requirement for users on Polymarket versus New York law?
Polymarket’s platform is open to users aged 18 to 20, whereas New York requires mobile sports bettors to be at least 21.
