New York sues Polymarket alleging unlicensed gambling operation

New York sued Polymarket's U.S. business on September 24, accusing it of running an illegal gambling operation in the state. Attorney General Letitia James and Governor Kathy Hochul announced the case against QCX LLC, which does business as Polymarket US.

The lawsuit asks a court to stop the company from operating in New York without a gambling license. It also seeks forfeiture of allegedly illegal gains, restitution to customers and fines equal to three times those gains.

Polymarket launched its U.S. platform in December 2025 with markets on sporting events, pitching users on sports first and markets on everything after that. The attorney general's office said its investigation found an illegal, unlicensed operation that exposes New Yorkers to serious financial and personal risk.

The state's theory is that the contracts are gambling under New York law because users stake money on uncertain outcomes outside their control. CoinDesk reported that the filing targets the sports markets Polymarket opened with and the broader expansion the company advertised. The platform has not obtained a license from the New York State Gaming Commission, the announcement states, which means it avoids the taxes licensed casinos and mobile sportsbooks pay.

"Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs," James said in the release. She accused the company of targeting the most vulnerable while depriving families of services funded by gambling tax revenue.

Hochul said the company knowingly violated state law and put New Yorkers at risk, singling out underage users as especially exposed to problem gaming. "Nobody is above the law in our state," she said, adding that she and James were fighting to end what she called an illegal operation.

Age limits form a distinct part of the complaint. Polymarket admits users ages 18 to 20, while New York requires mobile sports bettors to be at least 21. The attorney general's statement cited research linking early gambling exposure to depression, anxiety, mood swings and financial stress, plus a psychology association finding that about a third of people with gambling disorder experience suicidal ideation.

A Polymarket spokesperson did not immediately answer a request for comment, CoinDesk noted on September 24. The company has previously maintained that its event contracts are federally regulated financial products rather than state gambling.

That jurisdictional clash sits at the center of the case. Prediction market operators argue their contracts fall under the Commodity Futures Trading Commission at the federal level. States counter that sports-linked contracts are bets subject to state gambling rules, licensing and taxes. Decrypt wrote that the Trump administration has sided with the industry in lawsuits in Illinois, Arizona and Connecticut, while CFTC staff recently warned that a category of "mention" contracts invites manipulation.

New York has pressed the state-side view across several cases this year. James and Hochul sued Kalshi in July over similar allegations, with the attorney general seeking as much as $36 billion in penalties and disgorgement. The state sued Coinbase and Gemini in April over their prediction offerings, and James secured $8 million in September 2026 from a sweepstakes casino operator. Earlier actions include a January 2026 suit against game developer Valve and the shutdown of 26 sweepstakes casinos in June 2025, all recounted in the September 24 announcement.

The Kalshi fight shows how far these disputes can travel. CoinDesk added that New York's Kalshi case followed collapsed negotiations with Hochul's office and that a separate Kalshi case against New Jersey has been appealed to the U.S. Supreme Court. Courts hearing the state and federal claims have split venues before, and appeals courts are now handling several of them.

The lawsuit lands less than a year after Polymarket returned to the United States. The company spent years largely shut out of its home market after a 2022 settlement with the CFTC, then re-entered through its acquisition of the exchange QCX. Decrypt observed that both Polymarket and Kalshi have since grown to multi-billion-dollar valuations on the back of the prediction market boom.

For now the filing seeks only court orders and money. It does not allege criminal conduct, and no hearing date or ruling has been announced. The petition remains pending before the court named in the filing.