New York Attorney General Letitia James and Governor Kathy Hochul sued Polymarket’s US arm on Thursday, accusing the prediction market of running an unlicensed gambling operation in the state. The suit, filed in state court in Manhattan against QCX LLC, which trades as Polymarket US, asks for an order barring it from operating in New York, forfeiture of what the state calls illegal gains, restitution to users and fines equal to three times those gains.
The complaint says Polymarket never obtained a licence from the New York State Gaming Commission, and so avoided the taxes licensed operators pay. It also says the platform lets 18 to 20 year olds trade, although the state’s minimum age for mobile sports betting is 21. James accused the company of targeting the most vulnerable. It is the second such case in three months, after the same officials sued Kalshi in July.
Polymarket did not wait. It moved to shift the state case into federal court in the Southern District of New York and filed its own suit against James and Gaming Commission officials, arguing that event contracts on a CFTC-registered exchange are swaps and that federal law leaves states no room to regulate them. The CFTC itself sued New York in April on the same point.
The unresolved question is the one prediction markets carry into every court: whether a contract on a sports result is a derivative or a bet. At least one Kalshi case has been appealed to the Supreme Court, and until it rules, every state that sues opens another front. New York has also not said how much it believes Polymarket earned from its residents, the figure any penalty would be multiplied from.
