New York has sued Polymarket US, escalating the fight over whether prediction markets should be governed as federally regulated derivatives or as gambling under state law.
Attorney General Letitia James and Gov. Kathy Hochul announced the case on September 24. The defendant is QCX LLC, which does business as Polymarket US. The state alleges that the company operates an illegal, unlicensed gambling business in New York. Those are allegations in a civil case, not a court finding.
What New York wants the court to do
The complaint asks for an order stopping Polymarket from operating as an unlicensed gambling business in the state. New York also seeks restitution for users it says were harmed, forfeiture of allegedly illegal gains and fines equal to three times those gains.
The attorney general’s office says Polymarket has not obtained a license from the New York State Gaming Commission. It argues that the company therefore avoids taxes and consumer protections that apply to licensed casinos and mobile sports-betting platforms.
Age limits are another part of the case. New York says Polymarket makes its markets available to people ages 18 through 20, while the state requires mobile sports-betting customers to be at least 21. The complaint treats that access as evidence that the platform exposes younger users to gambling risks without the safeguards required of licensed operators.
Polymarket says federal law controls
Polymarket disputes the state’s theory. Chief legal officer Neal Kumar said the company would fight for its users and remain in New York, where it was founded and now employs more than 350 people, according to ABC News. The company also said it was open to discussing consumer protections with the attorney general’s office.
Its central legal argument is that event contracts are federally regulated derivatives outside the reach of state gaming laws. New York takes the opposite view: when customers stake money on uncertain outcomes beyond their control, the state says the contracts meet its definition of gambling.
That disagreement extends beyond Polymarket. New York filed a similar case against rival prediction market Kalshi in July and sued Coinbase and Gemini over their prediction-market products in April. The cases form part of a wider jurisdictional dispute between states seeking to enforce gambling rules and platforms that point to federal commodities regulation.
Polymarket launched its U.S. service in December 2025 with sports contracts before expanding into other subjects. The new lawsuit could restrict that service in New York if the state prevails, but the court must first decide whether New York’s gambling laws apply to the federally regulated market.
