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- New York Attorney General Letitia James and Governor Kathy Hochul sued Polymarket, alleging the platform is operating an unlicensed, illegal gambling business that bypasses state taxes and consumer protections, specifically highlighting concerns over underage access.
- Polymarket filed a countersuit and removed the case to federal court, arguing that the Commodity Futures Trading Commission holds exclusive regulatory authority over its event contracts and that federal law preempts state gambling enforcement.
New York has sued Polymarket, asking a court to block the prediction market platform from operating in the state on allegations that it is running an illegal gambling business.
The lawsuit matters because it sharpens the fight over whether prediction market contracts should be treated as regulated financial products or gambling under state law. New York officials say Polymarket’s offerings meet the state definition of gambling and therefore require a license from the New York State Gaming Commission.
According to the state, Polymarket has been operating without that license while also avoiding taxes tied to regulated gambling. New York said it wants the company to permanently stop doing business in the state, including advertising there, until it properly registers. The state is also seeking $100,000 and other fines.
Attorney General Letitia James said in a statement, “By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support.” She added, “My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”
Gov. Kathy Hochul also backed the case, saying, “By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.”
State targets licensing, taxes, and in-state operations
New York’s complaint argues that Polymarket’s contracts fall under the state’s gambling laws and cannot legally be offered without gaming approval. State officials also said gambling tax revenue supports public schools, youth sports programs, and problem gambling education and treatment.
The enforcement action asks the court to stop Polymarket from operating in New York until it is registered. That request extends beyond the platform’s core business and includes advertising in the state, according to the lawsuit summary.
The case was brought by the New York Attorney General’s office as part of a broader state push to rein in prediction markets. The article notes that New York also sued Kalshi in July over similar allegations.
Polymarket says it is staying in New York
Polymarket pushed back on the state’s position. Chief Legal Officer Neal Kumar said the company has been working with New York to address concerns and does not plan to leave the state.
“Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it,” Kumar said. He added: “We believe in New York and we’re staying here.”
What happens next will depend on how the court rules on New York’s request to block Polymarket, whether the company is required to register with the Gaming Commission, and whether the state wins the fines and permanent injunction it is seeking.
Source: As reported by Sarah Wynn.
