New York sues Polymarket over unlicensed gambling; company countersues state officials
New York sues Polymarket over unlicensed gambling; company countersues state officials #
New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit Thursday against Polymarket U.S., accusing the prediction market platform of operating an illegal gambling business in the state without a gaming license. The action, brought in state court in Manhattan, seeks a court order barring Polymarket from operating in New York, along with fines and restitution to affected users.
In a statement, James said the company was bypassing state law and “targeting the most vulnerable.” Hochul highlighted the risk to underage users, noting the platform accepts wagers from people as young as 18, below New York’s legal gambling age of 21. The AG’s office said the state now has illegal gambling allegations pending against four separate prediction market businesses.
Thursday’s action comes roughly two months after James brought a near-identical case against Kalshi, Polymarket’s closest rival, in July, and follows earlier suits against Coinbase Financial Markets and Gemini Titan filed in April. New York is one of several states seeking to bring event-contract platforms under state gambling law, a push that has produced conflicting outcomes in federal appeals courts. The Third Circuit blocked New Jersey from enforcing its gambling statutes against Kalshi earlier this year, while the Ninth Circuit ruled in late August that Nevada retains authority to regulate prediction markets as sportsbooks. New Jersey has since petitioned the Supreme Court to resolve the split.
Polymarket sought to have the state case transferred to the U.S. District Court for the Southern District of New York and simultaneously filed its own civil action in federal court against James and officials of the New York State Gaming Commission. Polymarket argues that states lack authority over event contracts because the company views them as swaps, a category regulated federally by the Commodity Futures Trading Commission. Under the Trump administration, the CFTC has aligned with prediction market platforms and has itself sued several states over their enforcement efforts.
Chief Legal Officer Neal Kumar dismissed the suit as a “copy/paste recycled lawsuit” and said Polymarket, which was founded in a New York City apartment and now employs more than 350 people there, has no plans to leave. The jurisdictional question of whether federal or state law governs prediction markets appears likely to reach the Supreme Court, given the existing circuit split.
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