New York takes legal action against Polymarket over alleged illegal gambling

New York Attorney General Letitia James and Governor Kathy Hochul on Thursday took legal action against crypto-based prediction platform Polymarket, alleging it operates an unlicensed gambling business within the state.

A probe by the Attorney General's office determined that the platform's activities fit New York's legal definition of gambling, since participants wager funds on uncertain events beyond their control.

The lawsuit claims Polymarket never secured a license from the New York State Gaming Commission, thereby sidestepping the taxes imposed on licensed casinos and mobile sportsbooks. Those tax revenues support public schools, youth sports programs, and treatment for problem gambling.

This legal action comes as agencies including the Securities and Exchange Commission and the Commodity Futures Trading Commission move to establish oversight of crypto-based prediction markets.

Polymarket and competitor Kalshi contend they are not gambling sites but rather federally supervised exchanges that offer "event contracts," a form of derivative, placing them under CFTC jurisdiction rather than state gambling laws.

The CFTC supports that position and in 2026 sued nine states, asserting its sole nationwide authority over the industry.

Thursday's filing also states that Polymarket allows users aged 18 to 20, even though New York mandates a minimum age of 21 for mobile sports betting.

"By skirting New York's laws, Polymarket is targeting the most vulnerable," James said. Hochul added that the company had "knowingly" violated state law and put underage users at risk.

The state is seeking a court order barring Polymarket from operating as an unlicensed gambling enterprise in New York. It also demands the company forfeit its illegal profits, compensate affected users, and pay penalties amounting to triple those gains.

The lawsuit marks the latest in a series of New York enforcement actions against platforms linked to gambling. James and Hochul sued rival prediction market Kalshi in July, and James filed lawsuits against Coinbase and Gemini in April over similar allegations. Earlier this month, James obtained $8 million from a major sweepstakes casino operator.

Polymarket launched in the U.S. in December 2025, initially offering bets on sports events with plans to broaden into various other categories.