Key Highlights
- New York Attorney General Letitia James and Governor Kathy Hochul sued Polymarket on September 24.
- The lawsuit alleges Polymarket US operated an unlicensed gambling business in New York.
- Officials allege users aged 18 to 20 could access markets despite New York’s 21-year minimum age for mobile sports betting.
New York Attorney General Letitia James and Governor Kathy Hochul have sued QCX LLC, which operates Polymarket US, alleging that the prediction market platform offered gambling-related contracts in the state without the required authorization.
The lawsuit, filed on September 24, focuses on contracts tied to sporting events and other uncertain outcomes. The complaint alleges that users risked money on events they could not control, which the state argues brings the activity within New York’s gambling laws.
The allegations have not been established by a court.
New York challenges Polymarket’s event contracts
The central issue is how Polymarket’s contracts should be classified under New York law.
State officials argue that users were effectively wagering on the outcomes of sporting events and other events of chance. The complaint alleges that Polymarket offered these markets without a license from the New York State Gaming Commission.
Attorney General James said the state’s gambling framework is intended to address risks associated with wagering and establish requirements for operators.
“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs.”
Governor Hochul also accused Polymarket of operating without the authorization required under state law.
Polymarket disputes New York’s allegations
Polymarket has disputed the allegations in New York’s lawsuit and said it plans to defend the platform in court while continuing discussions with state officials.
In a statement shared with The Crypto Times via email, Neal Kumar, Chief Legal Officer at Polymarket, said “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.
Polymarket believes in New York and is staying here. While the AG’s decision to copy-paste a recycled lawsuit is disappointing, we will fight for our users. We didn’t run to preemptively sue the state — we chose to engage with them directly on the substance and address their concerns. They preferred the media hit.
Any time the AG’s office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets.”
Complaint raises questions over user age
The lawsuit also challenges Polymarket’s access rules.
New York requires users to be at least 21 years old to participate in mobile sports betting. The complaint alleges that Polymarket markets were accessible to users between 18 and 20.
State officials argue that allowing people in that age group to participate creates additional consumer-protection concerns. The complaint also cites research and existing requirements for age verification and responsible-gambling measures at licensed sports-wagering operators.
State seeks penalties and restitution
New York is asking the court to prevent Polymarket from continuing to operate what the state describes as an unlicensed gambling operation in the state. The lawsuit also seeks forfeiture of alleged proceeds, restitution for affected users, civil penalties, and other remedies determined by the court.
The state is seeking penalties that could reach three times the gains it alleges Polymarket obtained through the disputed activity. Any penalties, restitution, or other remedies would depend on the court’s eventual ruling.
Polymarket faces similar state litigation
The New York lawsuit follows other legal challenges involving prediction market operators.
In July, James and Hochul sued Kalshi, arguing that its sports-related contracts constituted illegal gambling under New York law.
Polymarket separately faces litigation in Kentucky, where Attorney General Russell Coleman alleged in June that QCX operated an online sports-betting business without approval from the Kentucky Horse Racing and Gaming Commission.
The cases form part of a wider dispute over the legal status of sports prediction contracts. Prediction market operators have generally argued that their products are derivatives regulated by the Commodity Futures Trading Commission (CFTC) rather than gambling products governed by state gaming authorities.
New York case tests state gambling rules
The latest case brings that jurisdictional dispute into another state court.
Prediction markets now cover sports, elections, economic indicators, and other real-world events, creating potential overlap between federally regulated derivatives and activities traditionally governed by state gambling laws.
According to the complaint, Polymarket launched its U.S. operations in December 2025.
The court will now consider whether the markets identified in the lawsuit fall within New York’s gambling laws and whether the state can regulate the disputed activities.
The case adds another legal challenge for Polymarket as courts and regulators continue examining the boundary between state gambling rules and federal oversight of event contracts.
Also Read: CFTC Flags Manipulation Risk in Kalshi-Style “Mention” Prediction Markets, Issues New Advisory
