New York Sues Polymarket US, Calling Its Event Contracts Illegal Gambling
Attorney General Letitia James and Governor Kathy Hochul want the platform barred from the state and stripped of its profits, in the latest escalation between prediction markets and state regulators.
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New York has taken prediction-market operator Polymarket to court, filing suit on Thursday against the company's American arm and accusing it of running an unlicensed gambling business in the state. The action, brought jointly by Attorney General Letitia James and Governor Kathy Hochul, targets QCX LLC, the legal entity behind Polymarket US.
State lawyers are asking a judge to shut down Polymarket's New York operations until it holds a gambling license. They also want the company to disgorge revenue the state deems unlawful, compensate users through restitution, and pay civil penalties calculated at three times the disputed gains.
Polymarket relaunched in the United States in December 2025, opening with contracts tied to sporting results and signaling plans to broaden its offerings. Under New York law, the attorney general's office contends those contracts are wagers: participants stake money on outcomes they cannot control. The complaint adds a second problem — the platform admits users aged 18 and up, while the state sets 21 as the minimum for mobile sports wagering. A request for comment sent to Polymarket went unanswered.
A widening regulatory fight
At the heart of the dispute is a jurisdictional question the industry and the states have been arguing for months. Prediction-market firms insist their event contracts are financial instruments regulated in Washington by the Commodity Futures Trading Commission. State regulators, especially where sports are involved, see the same products as bets subject to local gambling statutes.
New York has emerged as one of the most aggressive participants in that standoff. In July it sued Kalshi — a rival prediction-market operator — after talks with the governor's office collapsed, pursuing penalties and disgorgement that could total $36 billion. Several of these battles are already before appeals courts, and the clash between Kalshi and New Jersey has reached the U.S. Supreme Court.
In a statement announcing the Polymarket case, James framed the stakes for consumers: "Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs."
The timing is notable: the suit lands less than a year after Polymarket re-entered the U.S. market, putting one of the sector's best-known platforms directly in the path of the country's most litigious state regulator.
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