New York sues Polymarket over unlicensed gambling operation
In brief
- New York sued Polymarket for operating an unlicensed gambling business without state authorization.
- Polymarket's markets meet New York's legal definition of gambling under state law.
- New York seeks to bar Polymarket from the state, forfeit gains, and impose triple-earnings fines.
The allegations
The attorney general's office found Polymarket is an illegal, unlicensed operation that exposes New Yorkers, including those under age 21, to serious financial and personal risk. New York is asking a court to bar Polymarket from operating in the state, force it to forfeit its gains, pay restitution to users, and impose fines equal to three times what it earned.
Officials argued the company sidestepped licensing and the taxes that regulated casinos and mobile sportsbooks pay. By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support, James said in a statement.
Hochul added that Polymarket had put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.
What are prediction markets?
Prediction markets let users buy and sell contracts tied to the outcome of real-world events, with each contract resolving to a fixed value when the event concludes. Polymarket launched in the U.S. in December 2025. The space has attracted serious capital—Kalshi and Polymarket have both reached multi-billion-dollar valuations after massive fundraises.
The appetite for these markets is substantial. Analysts at Bernstein projected prediction-market trading volumes could reach $1 trillion by 2030, with revenue near $10.8 billion.
Regulatory escalation
New York isn't alone. The state sued rival Kalshi in July, with the attorney general seeking $36 billion over what she called illegal gambling. New York also sued Coinbase and Gemini in April over their prediction offerings. State-level challenges against prediction markets have swept into Kentucky, Illinois, and other states.
The industry's defense hinges on federal turf. The platforms have generally argued they operate as federally regulated venues under the Commodity Futures Trading Commission. The Donald Trump administration has waded into the jurisdictional clash on the prediction market industry's side.
