New York Attorney General Files Lawsuit Against Polymarket, Alleging Illegal Gambling Operations

New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit Thursday against the crypto‑based prediction market Polymarket, alleging that the platform operates an unlicensed gambling business within the state.

An investigation by the Attorney General’s office determined that the prediction markets meet New York’s legal definition of gambling, as participants wager money on uncertain outcomes they cannot influence.

The lawsuit claims Polymarket never secured a license from the New York State Gaming Commission, thereby evading taxes that licensed casinos and mobile sportsbooks are required to pay. Those tax revenues support public schools, youth sports programs, and problem‑gambling treatment services.

The filing follows heightened regulatory scrutiny, with agencies such as the Securities and Exchange Commission and the Commodity Futures Trading Commission seeking to establish oversight of crypto‑powered prediction markets.

Polymarket and its competitor Kalshi maintain that they are not gambling sites but federally regulated exchanges offering “event contracts”—a type of derivative that should fall under the Commodity Futures Trading Commission’s authority rather than state gaming statutes.

The CFTC shares this view and has sided with the platforms, having sued nine states in 2026 to assert exclusive nationwide jurisdiction over the industry.

The complaint alleges that Polymarket permits users as young as 18 to participate, despite New York’s requirement that mobile sports bettors be at least 21 years old.

“By circumventing New York’s regulations, Polymarket is targeting the most vulnerable,” James remarked. Governor Hochul added that the company had “knowingly” breached state law, exposing underage users to risk.

New York is seeking a court order to prevent Polymarket from operating as an unlicensed gambling business in the state. The request also calls for the company to forfeit its illegal earnings, reimburse harmed users, and pay civil penalties totaling three times those gains.

This suit marks the latest in a series of New York actions targeting gambling‑adjacent platforms. Attorney General James and Governor Hochul previously sued rival prediction market Kalshi in July and filed complaints against Coinbase and Gemini in April on comparable grounds. Earlier this month, James obtained an $8 million settlement from the nation’s leading sweepstakes‑casino operator.

Polymarket entered the U.S. market in December 2025, initially offering bets on sporting events with plans to broaden its platform to cover a wide array of topics.

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