New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit Wednesday accusing prediction market Polymarket of running an unlicensed gambling business in the state, and are asking a court to bar the platform from serving New York users altogether. The announcement came via an official press release from the attorney general's office.

The suit, filed against QCX LLC, doing business as Polymarket US, alleges that the platform's markets meet New York's legal definition of gambling because users bet money on uncertain outcomes outside their control. According to the attorney general's office, the operation sidesteps the licensing requirements and the taxes that regulated casinos and mobile sportsbooks are required to pay.

Polymarket launched in the U.S. in December 2025, offering wagers on sporting events and, in the company's own pitch, markets on "everything." State investigators concluded the platform is an illegal, unlicensed operation that exposes New Yorkers—including those under the legal gambling age of 21—to serious financial and personal risk.

"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, noting that gambling laws fund educational and public benefit programs. Hochul added that Polymarket had "put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming."

The state is asking a court to bar Polymarket from operating in New York, force it to forfeit its gains, pay restitution to users, and pay fines equal to three times what it earned through the alleged conduct. The sweeping requests come just months after Polymarket's U.S. debut, and the case turns on the same question running through the entire sector: whether these platforms are gambling operations under state law or federally regulated trading venues.

How Prediction Markets Work

Prediction markets let users buy and sell contracts tied to the outcome of real-world events, from elections and sporting results to economic data. Each contract resolves to a fixed value when the event concludes, typically settling at $1 if the outcome occurs and $0 if it doesn't. That mechanism turns a contract's live price into an implied probability: a contract trading at 60 cents reflects roughly a 60% chance of the outcome. That core design—money riding on outcomes no individual trader controls—is precisely the feature New York cites in calling Polymarket's markets gambling, putting the product itself at the heart of the case.

As a business, the sector has surged from a crypto-native curiosity into a mainstream category. Kalshi and Polymarket have both reached multi-billion-dollar valuations after massive fundraises, and analysts at Bernstein have projected prediction-market trading volumes could reach $1 trillion by 2030, with revenue near $10.8 billion. Those projections underscore the commercial stakes riding on how the industry's legal battles are resolved.

A Broader Legal Campaign

Wednesday's action extends an aggressive campaign by James and Hochul against prediction markets. The pair sued rival Kalshi in July, with the attorney general seeking $36 billion over what she likewise called illegal gambling. New York also sued Coinbase and Gemini in April over their prediction offerings, part of a wave of state-level challenges that has swept into Kentucky, Illinois, and other states.

The platforms have generally argued they operate as federally regulated venues under the Commodity Futures Trading Commission (CFTC)—a jurisdictional clash the Donald Trump administration has waded into on the industry's side. The fight comes as the CFTC itself has grown wary of at least some event contracts, with staff recently warning that "mention" contracts invite manipulation. How courts come down on that dispute will help determine whether prediction markets can keep expanding in New York and beyond—or find themselves barred from entire states.