New York Attorney General Letitia James sued Polymarket on Thursday in a Manhattan state court, accusing the prediction-market operator of running an illegal gambling business. Prediction markets let users trade event contracts tied to real-world outcomes, with payouts determined by how those events resolve. The lawsuit describes Polymarket’s event contracts as “quintessentially gambling” under New York law.

The case extends James’ broader crackdown on prediction markets. She filed a similar lawsuit against Kalshi in July and petitions against Coinbase Financial Markets and Gemini Titan in April. New York alleges that all four companies operated without obtaining a license from the state’s Gaming Commission.

New York also claims Polymarket allowed users between 18 and 20 years old to trade on its platform, even though the state’s minimum age for mobile sports betting is 21. James said the company’s conduct poses a public-health risk by exposing New Yorkers to gambling addiction without sufficient protections.

New York Gov. Kathy Hochul also accused Polymarket of knowingly violating state law and putting residents, particularly younger users, at risk. The state is seeking civil fines, the surrender of profits it says were obtained illegally, and repayment to affected customers.

🚨BREAKING: New York SUES Polymarket over alleged illegal gambling operations, per Reuters. New York Attorney General Letitia James says the platform violates state gambling laws, extending her crackdown on prediction markets after similar cases against Kalshi, Coinbase and… pic.twitter.com/WLsGuHR3cB — Coin Bureau (@coinbureau) September 24, 2026

Polymarket said it was disappointed by the lawsuit. Its chief legal officer, Neal Kumar, said the company had first tried to engage directly with state officials and offered to discuss its user-protection measures. According to Kumar, state officials chose to file suit rather than continue those discussions.

Polymarket describes itself as the world’s largest prediction market. Founded in 2020, the company left the US market for more than three years. It relaunched in the country last December after receiving approval from the Commodity Futures Trading Commission (CFTC), the federal agency that oversees derivatives, three months earlier.

Polymarket also received investment from 1789 Capital last year. Donald Trump Jr. is a partner at the firm and an adviser to Polymarket. New York estimates that Polymarket’s business is worth more than $20 billion.

The lawsuit is part of a wider dispute between state authorities and federal regulators over who has jurisdiction over prediction markets. The CFTC has maintained that it has sole authority to oversee the sector, but federal appeals courts have not reached agreement on the issue. At the center of the dispute is whether event contracts should fall under federal derivatives oversight or under state gambling laws that require licenses. Some legal experts believe the US Supreme Court may eventually have to resolve the question.

Earlier this month, New Jersey asked the Supreme Court to review its case against Kalshi. A decision to hear that case could produce a ruling with implications for the broader industry, although the court has not said whether it will take it up. Prediction-market companies currently face conflicting state and federal regulatory positions.

Thursday’s filing cited specific examples from Polymarket’s application, including a July contract on whether the Angeles Dodgers would defeat the New York Mets by more than 1.5 runs. The Dodgers won the game 4-2.

New York’s filing indicates that state officials could seek to prevent New York residents from using Polymarket altogether. The original report is available at CoinCentral, and the lawsuit was also reported by Reuters.