New York Attorney General Letitia James filed a lawsuit on Sept. 24, 2026, accusing prediction market Polymarket of operating an unlicensed gambling business in the state. Announced alongside Governor Kathy Hochul, the complaint alleges Polymarket failed to obtain a license from the New York State Gaming Commission and allowed users as young as 18 to participate despite the state’s 21-and-over requirement for mobile sports betting. AP News
An investigation by the Attorney General’s office concluded that Polymarket’s markets meet New York’s legal definition of gambling. The state argues that users stake money on uncertain outcomes outside their control and that Polymarket therefore falls under state gambling laws.
Polymarket Allegedly Operated Without State Licensing
The suit alleges Polymarket never obtained a license from the New York State Gaming Commission. New York argues that operating outside the state’s gambling framework also allows the platform to avoid taxes paid by licensed casinos and mobile sportsbooks, which help fund education and other public programs.
The complaint also alleges Polymarket allows users aged 18 to 20 to participate, while New York requires mobile sports bettors to be at least 21.
“By skirting New York’s laws, Polymarket is targeting the most vulnerable,” James said. Hochul separately accused the company of knowingly violating state law and putting younger users at risk.
State Seeks Forfeiture, Restitution and Fines
New York is asking the court to stop Polymarket from operating as an unlicensed gambling business in the state.
The lawsuit also seeks forfeiture of allegedly illegal gains, restitution for users and civil penalties. The requested penalties include three times the company’s alleged gains and $100,000 for each alleged instance of offering or conducting sports or mobile sports betting in New York.
Polymarket Files Its Own Lawsuit Against New York
Polymarket responded within hours by filing a federal lawsuit against James and other New York officials.
The company argues that its event contracts are federally regulated derivatives and that the Commodity Futures Trading Commission, rather than individual state gaming authorities, has jurisdiction over its U.S. operations. Polymarket claims federal law therefore prevents New York from applying its gambling laws to the platform.
Polymarket Chief Legal Officer Neal Kumar said the company had attempted to engage with state officials before the lawsuit and that it would fight the state’s action. The company maintains that prediction markets differ from conventional sportsbooks because users trade contracts with one another while the platform earns fees.
Federal and State Regulators Clash Over Prediction Markets
The dispute reflects a broader disagreement over whether prediction markets should primarily be regulated as gambling at the state level or as derivatives under federal commodities law.
The CFTC has backed the federal-jurisdiction position in litigation of its own. In 2026, the agency brought actions involving nine states as it sought to prevent state gambling laws from being applied to federally regulated prediction markets.
That dispute remains unsettled nationally, with different courts considering how the Commodity Exchange Act interacts with state gambling laws.
Part of Broader New York Enforcement
The Polymarket case follows other New York actions against prediction-market operators. James sued rival Kalshi in July, similarly alleging that its prediction markets constitute gambling offered without a state license.
New York also brought actions against Coinbase and Gemini over prediction-market products they offered to users, alleging that the contracts violated state gambling laws.
Polymarket launched its U.S. platform in December 2025, initially offering markets tied to sporting events and promising to expand into a broader range of subjects. The competing lawsuits now put the company’s New York operations at the center of the wider legal battle over who has authority to regulate prediction markets.
