New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit against Polymarket US on September 24, accusing the prediction market platform of running an illegal, unlicensed gambling operation in the state.

According to a press release from the Office of the Attorney General, the state's investigation concluded that Polymarket's markets fall under New York's legal definition of gambling, because users wager money on outcomes they cannot control. In the suit, brought before a New York County court, the state is seeking an order barring the platform from operating as an unlicensed gambling business, forfeiture of all illegal gains, restitution to users, and fines equal to three times those gains.

No License, Unpaid Taxes, and Under-21 Access

The complaint targets QCX LLC, the company doing business as Polymarket US, which launched its American platform in December 2025 with a promise of "sports, followed by markets on everything." New York says the company never obtained a license from the New York State Gaming Commission, allowing it to sidestep the taxes that licensed casinos and mobile sportsbook operators must pay — revenue the state says funds public schools, youth sports programs, and problem-gambling treatment.

The suit also alleges that Polymarket lets users aged 18 to 20 place bets, even though state law sets the minimum age for mobile sports betting at 21.

"Targeting the Most Vulnerable"

James said the state's gambling laws exist to protect New Yorkers and fund public programs, adding that "by skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support." Hochul said the company "put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming."

The filing is the latest step in an enforcement campaign that has already produced lawsuits against rival prediction market Kalshi in July and against Coinbase and Gemini in April. Taken together, the cases have pushed the legal status of prediction markets — gambling product or federally regulated event contract — into courts across the country.

A Federal Fight Is Now in Play

Polymarket chief legal officer Neal Kumar said the company was "founded in a tiny NYC apartment and now has more than 350 employees here" and that it will "fight for our users," describing the filing as a recycled lawsuit.

Polymarket argues that its markets are federally regulated event contracts under the Commodity Futures Trading Commission, not gambling. That dispute is now before a divided set of federal appeals courts, as well as a case New Jersey has asked the Supreme Court to take up. How that question is resolved would determine whether prediction market platforms operate under a single federal framework, as Polymarket contends, or under state-by-state gambling regimes of the kind New York is asserting. Attention now turns to whether the Supreme Court agrees to hear New Jersey's case and how the divided appeals courts rule.

Polymarket US operates through QCX, a CFTC-licensed firm it acquired, and recently launched perpetual trading with up to 20x leverage. The lawsuit follows a similar confrontation France escalated in July, when regulators ordered internet providers to block Polymarket.