Key Points
- New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit against Polymarket, alleging its prediction markets constitute unlicensed gambling under state law.
- The case targets Polymarket’s US platform, which launched in December 2025 with sports-related event contracts, and seeks to block the company from operating as an unlicensed gambling business in New York.
- The lawsuit adds to a broader dispute between state authorities and the federal CFTC over jurisdiction and oversight of prediction markets, following New York’s July case against Kalshi.
New York has escalated its regulatory challenge against prediction markets, suing Polymarket over allegations that its US platform operates as an unlicensed gambling business in the state.
Attorney General Letitia James and Governor Kathy Hochul announced the lawsuit Thursday against QCX LLC, which operates as Polymarket US. The state alleges that Polymarket’s event contracts constitute gambling under New York law and that the company has not obtained the required state authorization.
The case follows New York’s earlier lawsuit against Kalshi and comes amid a broader dispute over whether prediction markets offering event-based contracts should primarily be governed by state gambling laws or federal derivatives regulations.
New York Targets Polymarket’s Sports Contracts
According to the state’s complaint, Polymarket launched its US platform in December 2025, initially offering contracts tied to sporting events before expanding into additional markets.
New York officials argue that the contracts meet the state’s definition of gambling because their outcomes depend on uncertain events outside a bettor’s control or on games of chance. The state also alleges that Polymarket operated without obtaining a license from the New York State Gaming Commission.
The lawsuit seeks a court order preventing Polymarket from operating as an unlicensed gambling business in New York. State authorities are also seeking fines, forfeiture of alleged illegal gains and restitution for affected users.
The complaint also raises concerns about access by users between 18 and 20 years old. New York’s legal gambling age for mobile sports wagering is 21, while the state alleges that Polymarket’s platform was accessible to younger users.
Case Adds to New York’s Prediction-Market Campaign
The Polymarket lawsuit is part of a wider enforcement campaign by New York authorities targeting prediction-market platforms.
In July, James and Hochul sued Kalshi, alleging that its prediction-market platform constituted an illegal and unlicensed gambling operation in New York. The state made similar allegations against Coinbase Financial Markets and Gemini Titan in April over prediction markets covering sports, entertainment and elections.
The cases reflect New York’s position that certain event contracts function as gambling products when users wager money on uncertain outcomes.
For prediction-market companies, however, the legal classification has broader implications because many of these platforms operate within a federal regulatory framework overseen by the Commodity Futures Trading Commission.
Federal and State Authorities Disagree Over Jurisdiction
The Polymarket case adds another front to the ongoing dispute over who has authority to regulate prediction markets.
CFTC Chair Michael Selig has argued that the federal agency has exclusive jurisdiction over the derivatives markets it regulates. New York officials, meanwhile, are seeking to apply state gambling laws to prediction-market operations accessible to residents.
A similar jurisdictional dispute is already playing out in New Jersey. State officials have asked the US Supreme Court to consider their case involving Kalshi, potentially giving the court an opportunity to address the boundaries between federal derivatives oversight and state gambling regulation. The court has not indicated whether it will take up the case.
The outcome of these legal challenges could have implications beyond individual companies, particularly if courts are asked to determine whether event contracts offered through federally regulated exchanges can also be subject to state gambling restrictions.
Polymarket Faces a Broader Regulatory Test
The legal challenge comes as prediction markets continue expanding across sports, politics, economic indicators and other real-world events.
The CFTC has separately increased its scrutiny of certain prediction-market contracts, including “mention markets” tied to the words or actions of specific individuals. The agency recently warned that such contracts can present heightened manipulation risks and said exchanges should ensure listed contracts are not readily susceptible to manipulation.
That federal scrutiny and the state-level lawsuits represent separate regulatory concerns, but together they demonstrate the increasingly complex oversight environment facing prediction-market operators.
Outlook
The New York lawsuit places Polymarket at the center of the broader legal question over how prediction markets should be classified and regulated in the United States. The immediate dispute concerns whether Polymarket can offer its event contracts to New York residents under the state’s gambling framework, while the broader legal conflict involves the respective authority of state regulators and the federal CFTC.
As cases involving Polymarket, Kalshi and other platforms progress, court decisions could help establish how state gambling laws interact with federally regulated prediction markets and determine the regulatory framework under which the industry operates.
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