New York state has filed a lawsuit against Polymarket, the crypto-based prediction market, charging that the platform operates as an illegal gambling operation without the required state license. The suit, announced Thursday, is the latest in a string of enforcement actions by the Empire State against financial and betting platforms it says are skirting state law.
Governor Kathy Hochul (D) framed the legal action as a consumer protection measure, arguing that Polymarket has knowingly violated state statutes and endangered vulnerable residents. "By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming," Hochul said in a statement. She added that her administration will "always stand up for New Yorkers when bad corporate actors prey on consumers and threaten tax dollars that fund schools and critical public services."
The lawsuit contends that Polymarket has failed to secure a license from the state's gaming commission and has not paid the associated taxes. It also alleges the platform allows users under 21 to place bets, which would violate New York's age restrictions on gambling. The state's attorney general's office is leading the case, which seeks to halt Polymarket's operations in New York and impose penalties.
Polymarket has pushed back, with chief legal officer Neal Kumar saying the company will fight the allegations. "We believe in New York and we're staying here," Kumar said. "While the AG's decision to copy/paste a recycled lawsuit is disappointing, we'll 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."
The New York action is part of a broader legal clash over who holds regulatory authority over prediction markets. States argue these platforms, which let users wager on everything from election outcomes to weather events, fall under their gambling laws. The platforms, however, contend they are already subject to federal oversight by the Commodity Futures Trading Commission (CFTC), which has taken a more accommodating stance under the Trump administration.
The dispute has reached the federal courts, with conflicting rulings. In a case involving rival platform Kalshi, the 3rd Circuit Court of Appeals blocked New Jersey from enforcing its gambling laws, siding with the company's argument that federal regulation preempts state action. But in late August, the 9th Circuit ruled that Nevada could treat prediction markets like gambling and sportsbooks, allowing state regulators to intervene.
New Jersey has asked the Supreme Court to resolve the split, a move that could ultimately determine the legal landscape for prediction markets nationwide. The high court has not yet decided whether to take up the case.
For New York, the lawsuit against Polymarket mirrors recent actions against Kalshi and crypto exchanges Coinbase and Gemini, signaling a coordinated push by state regulators to assert jurisdiction over digital platforms that offer financial or betting services. The outcome of these cases could have significant implications for the rapidly growing prediction market industry.
Polymarket, which gained prominence during the 2024 U.S. election cycle, allows users to trade on the likelihood of political and other events. Its popularity has surged, but so has scrutiny from state and federal regulators. The company has maintained that its operations are legal and that it is committed to compliance.
As the legal battles unfold, the future of prediction markets in the United States remains uncertain. The Supreme Court's potential intervention could provide clarity, but until then, states and platforms are locked in a high-stakes fight over who gets to call the shots.
