New York sues Polymarket as company countersues in federal court
Attorney General Letitia James accuses Polymarket of running an unlicensed betting operation, hours before the company sued the state over the crackdown.
New York has taken Polymarket to state court, seeking to halt the prediction market operator's sports offering in the state, just two months after suing rival Kalshi on similar grounds.
Governor Kathy Hochul and Attorney General Letitia James announced on Thursday 24 September that James had filed suit in the Supreme Court of the State of New York against QCX, Polymarket's US business. The complaint alleges the company has run an illegal gambling operation since December 2025, including access for users under the state's legal gambling age of 21.
"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, adding that the state was "fighting to protect New Yorkers and put this illegal operation to an end."
What New York is asking for
The lawsuit also argues that prediction market firms registered with the Commodity Futures Trading Commission do not pay the gaming taxes that fund state services, and says Polymarket has offered markets on games involving in-state college teams, which New York gaming law prohibits.
James's office is asking the court to force Polymarket to stop operating and marketing in New York permanently, hand over itemised customer transaction records, pay restitution to users, and cover damages, disgorgement and a fine set at three times its financial gain from breaking state law, alongside a $100,000 penalty for every sports wagering offer made in the state.
"By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support," James said, adding that her office "will never hesitate to take action to defend our laws and keep New Yorkers safe."
Polymarket hits back
Polymarket Chief Legal Officer Neal Kumar rejected the state's approach in a statement to SBC Americas, calling the action a "media hit" and stressing the firm's roots in the city, where he said it now employs more than 350 people after starting in "a tiny NYC apartment."
Kumar said the company had wanted to resolve the dispute directly. "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," he said, adding that Polymarket's door remained open to the attorney general's office "for a conversation about how we protect consumers and offer fair, transparent and legal markets."
Hours later, Polymarket filed its own suit against James and other state officials in Manhattan federal court, seeking to block New York's attempt to shut down its home-state offering. The company described the state's move as an assertion of power that federal law does not allow.
A tangled legal picture
The parallel cases add to an already tangled legal picture in the country's largest sports betting market. New York's complaint against Polymarket closely mirrors the one it brought against Kalshi in state court in late July, which is seeking $36 billion in total. That filing came the day after a federal court denied Kalshi an injunction pending appeal in its separate fight against the New York State Gaming Commission, a dispute that began when the regulator issued Kalshi a cease-and-desist order in October 2025.
Eleven days after suing Kalshi, the CFTC issued an emergency order telling Kalshi to keep operating in New York despite the federal court rulings, prompting James's office to urge judges not to let the federal intervention affect Kalshi's injunction proceedings. The CFTC has also brought its own federal suit against New York, filed in April, a week after James separately sued Coinbase and Gemini over what her office called illegal gambling platforms.
The legal pressure comes as prediction market operators have deepened their profile in New York sport. Polymarket became a partner of the NHL's New York Rangers and Madison Square Garden in January, while Kalshi struck its own Madison Square Garden partnership in May, which included a dedicated "Kalshi Concourse" inside the venue.