New York sues Polymarket over illegal gambling operation
In brief
- New York sued Polymarket for offering sporting event contracts violating state gambling laws.
- Lawsuit follows similar actions against Kalshi, Coinbase, and Gemini platforms.
- State officials claim Polymarket circumvents New York's gambling regulation via prediction markets.
- Federal CFTC asserts exclusive jurisdiction, creating regulatory conflict with state authorities.
State Alleges Circumvention of Gambling Rules
New York state officials filed a lawsuit against Polymarket alleging that the company's prediction market event contracts violated state gambling laws. State lawyers argued the platform sought to sidestep New York's regulatory framework by rebranding wagering as something else.
"seeks to avoid the legal and financial consequences of New York's close regulation of gambling by offering what is quintessentially wagering under the guise of 'event contracts' on a 'prediction market,'" — New York state filing against Polymarket
The lawsuit specifically targeted Polymarket's mobile app launched in December 2025, which features sporting event contracts. State officials indicated they could also seek to block the platform to residents.
Growing Conflict Over Regulatory Authority
This action isn't isolated. The lawsuit followed a similar action against Kalshi in July and litigation against prediction market platforms run by Coinbase and Gemini in April. The pattern reveals deepening tension between state regulators and federal agencies over prediction markets.
US Commodity Futures Trading Commission Chair Michael Selig has claimed that the federal agency has "exclusive jurisdiction" over prediction market companies. That assertion directly contradicts state-level enforcement efforts. Earlier this month, New Jersey officials petitioned the US Supreme Court to hear arguments over its case against Kalshi, escalating the jurisdictional dispute to the nation's highest court.
The case against Polymarket is the latest example of US state authorities at odds with federal agencies over who has authority over prediction markets. Until courts clarify the boundary, expect more lawsuits.
