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New York Sues Polymarket Over Alleged Unlicensed Gambling
State seeks a ban, restitution and triple penalties while Polymarket vows to fight
TL;DR
- New York Attorney General Letitia James and Governor Kathy Hochul sued Polymarket, alleging its U.S. operation offers illegal gambling without a state license.
- The state says Polymarket permits underage access, avoided gambling taxes and should forfeit gains, compensate users and face triple penalties.
- Polymarket Chief Legal Officer Neal Kumar said, “We’ll fight for our users,” as a broader state-federal dispute over prediction markets continues.
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New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit against Polymarket on September 24, 2026, alleging its U.S. business operates an illegal gambling platform without a New York license and allows customers below the state’s legal betting age to participate.
The case targets QCX LLC, which does business as Polymarket US. Polymarket launched its U.S. operation in December 2025 with wagers on sporting events and promoted broader markets covering “everything.” New York argues the contracts qualify as gambling because customers risk money on uncertain outcomes outside their control.
State officials say Polymarket never obtained a license from the New York State Gaming Commission and avoided taxes paid by licensed casinos and mobile sportsbooks. The complaint also alleges the platform permits users ages 18 to 20 to trade even though New York requires mobile sports bettors to be at least 21.
James said the rules serve consumer and public-finance purposes. “Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” she said.
James also said: “By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support.” Hochul said Polymarket had “put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.”
New York seeks forfeiture, restitution and triple fines
New York is asking a court to bar Polymarket from continuing the challenged operations in the state, require the company to forfeit gains linked to the alleged conduct and order restitution for harmed users. The state also wants fines equal to three times those gains.
Polymarket signaled that it plans to contest the case. Polymarket Chief Legal Officer Neal Kumar said, “We’ll fight for our users.” Kumar said the company started in a small New York City apartment, now employs more than 350 people in the city and intends to remain there.
Prediction markets let users trade contracts tied to real-world outcomes such as elections, sports results and economic data. A typical contract settles at $1 when an outcome occurs and $0 when it does not. A contract trading at 60 cents therefore represents an implied probability of roughly 60%.
The sector has expanded into a mainstream business category, with Polymarket and Kalshi reaching multi-billion-dollar valuations after major fundraising rounds. Analysts at Bernstein projected prediction-market trading volume could reach $1 trillion by 2030, with revenue near $10.8 billion.
Lawsuit extends broader prediction-market fight
New York sued Kalshi in July 2026 in Manhattan state court using similar arguments involving unlicensed gambling and underage access. James was seeking $36 billion in that case. New York also sued Coinbase and Gemini in April 2026 over their prediction-market products.
Baltimore separately sued Kalshi and Polymarket on August 13, 2026, alleging the companies misled consumers about whether their products were legal and properly regulated. Prediction-market disputes have also reached Kentucky and Illinois.
The platforms have generally argued that their event contracts fall under federal oversight by the Commodity Futures Trading Commission rather than state gambling regulation. Kalshi has characterized its contracts as federally regulated derivatives, and the CFTC has opposed state regulation of the sector. The Donald Trump administration has also sided with the prediction-market industry in the broader jurisdictional dispute.
Federal oversight has not eliminated concerns about individual products. CFTC staff recently warned that so-called “mention” contracts could invite manipulation.
This article has been refined and enhanced by ChatGPT.
