New York Sues Polymarket for Illegal Gambling Operations
Quick Look
- New York State Attorney General Letitia James filed a lawsuit against Polymarket U.S. alleging illegal gambling operations, claiming the platform targets vulnerable users and violates state laws requiring users to be at least 21.
- The suit seeks penalties, restitution, and trading data, following a similar action against competitor Kalshi.
- Polymarket defends its presence in New York and vows to fight the lawsuit.
AI-generated summary
Why It Matters
New York previously sued Kalshi, a competitor of Polymarket, nearly two months prior to this lawsuit. Polymarket U.S. launched in December 2025 and is regulated by the CFTC, while also operating an offshore platform from Panama since 2020.
New York State filed suit against Polymarket U.S. on Thursday, nearly two months after the state sued the platform's competitor, Kalshi.
"By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support," state Attorney General Letitia James said in a statement.
The lawsuit claims Polymarket operates an illegal gambling platform and is in violation of state gambling laws, including having no license with the New York State Gaming Commission. The lawsuit further claims Polymarket allows activity by users over 18 and cited a report from the state's Office of Addiction Services and Supports that those between 18 and 24 are at "high-risk" of gambling addictions. New York State gambling law requires users be at least 21 years old.
"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," Governor Kathy Hochul said in a statement.
Penalties and earnings
The lawsuit asks for penalties, including three times the amount of any Polymarket gains, and to pay $100,000 for each attempt or offer of "sports wagering or mobile sports wagering" in New York. The lawsuit also asks Polymarket U.S. to provide an account of all trades placed on the platform, the money lost by users and the amount Polymarket U.S. earned.
Polymarket U.S. debuted in December 2025 and is regulated by the Commodity Futures Trading Commission, the federal agency that regulates prediction markets platforms. The company also runs an offshore predictions platform from Panama, which was introduced in 2020.
The lawsuit is the latest in the escalating regulatory feud between states and the platforms. The CFTC has retaliated, suing several states and asserting it has the right to regulate the markets.
Polymarket defended itself against the latest New York action.
"Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. We believe in New York and we're staying here. While the AG's decision to copy/paste a recycled lawsuit is disappointing, we'll fight for our users," said Neal Kumar, the chief legal officer for the platform.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
What to Watch
AI outlook — possibilities, not facts
Polymarket will be required to pay penalties and provide trading data if the court rules in favor of New York State.
Likely · Within months
The CFTC may intervene or assert federal jurisdiction in response to New York's lawsuit against Polymarket.
Possible · Within weeks
Open Questions
- What specific trades or user losses will be disclosed if Polymarket complies with the lawsuit's demand for trading data?
- How will the CFTC respond to New York's lawsuit against Polymarket, given its prior retaliation against state actions?
- What is the likelihood of Polymarket obtaining a license from the New York State Gaming Commission to continue operations legally?
