New York sues Polymarket, calling prediction markets illegal gambling

New York's attorney general, Letitia James, filed a petition in a Manhattan state court on Thursday accusing Polymarket of operating an unlicensed gambling business, widening her campaign against prediction markets.

The action follows a similar case against rival Kalshi two months ago and petitions filed five months ago against two other operators, Coinbase Financial Markets and Gemini Titan. All are accused of running without the licences required by the New York State Gaming Commission, of encouraging problem gambling — particularly among people under 21 — and of putting users' financial, emotional and physical health at risk.

"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.

The state is seeking civil fines, the forfeiture of illegal gains and full restitution for customers.

Prediction markets let users wager through event contracts on outcomes such as sports results, elections and cultural events like the Oscars. James has described such contracts as "quintessentially gambling" because participants bet on events they do not control and expect payouts when they win. The petition cited recent examples, including a market on whether the Los Angeles Dodgers would beat the New York Mets on July 24, 2026, by more than 1.5 runs; the Dodgers won 4-2.

New York also objected to Polymarket allowing 18- to 20-year-olds on its platform, while state law sets a minimum age of 21 for mobile sports betting. By permitting gambling without state oversight, the company is "exposing New Yorkers to gambling addiction with few, if any, safeguards," James said in the petition.

Polymarket said it was disappointed by the decision to sue. "We chose to engage with them directly on the substance and address their concerns," Chief Legal Officer Neal Kumar said in a statement. "They preferred the media hit. Any time the (attorney general's) office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets."

The case is the latest move by US states to rein in an industry whose popularity surged after it outperformed pollsters in predicting Donald Trump's victory over Kamala Harris in the 2024 presidential election. The states are also at odds with the Trump administration, with the Commodity Futures Trading Commission asserting exclusive authority over prediction markets. Federal appeals courts are split on who should regulate the sector, raising the prospect that the US Supreme Court may have to settle the question.

Founded in 2020, Polymarket describes itself as "the world's largest prediction market." It stayed out of the US market for more than three years before relaunching last December, three months after receiving a green light from the CFTC. The company also drew an investment last year from 1789 Capital, a venture capital firm backed by the president's oldest son, Donald Trump Jr., who is a partner there and an adviser to Polymarket. New York said the value of Polymarket's business is reported to exceed $20 billion.