New York Sues Polymarket Accusing the Prediction Market of Running an Illegal Gambling Business

New York has taken the prediction market boom to court on its home turf. Attorney General Letitia James sued Polymarket, alleging the company has been running an unlicensed and illegal gambling operation, Futurism reports.

The state wants a court order blocking Polymarket's operations, along with fines and the forfeiture of what it calls illegal gains. It is a civil lawsuit, not a criminal case, and nothing yet forces Polymarket out of New York.

Second target in a month

Polymarket is not alone. The suit comes just over a month after New York sued Kalshi, Polymarket's main US rival, on the same theory.

Governor Kathy Hochul framed the case as consumer protection. She said Polymarket put New Yorkers at risk, "especially those underage who are most vulnerable to problem gaming."

Polymarket says it is staying

The company's response was pointed. Chief legal counsel Neal Kumar said Polymarket was founded in a tiny New York City apartment and now employs more than 350 people in the state, and that it intends to stay and fight.

Kumar called the lawsuit a recycled media hit, filed after the company had tried to engage with the attorney general's office. That is an unusual position for a firm the state wants to shut down: one of its biggest employee bases is in the jurisdiction suing it.

Gambling or finance

The legal fight turns on a definition. Polymarket says it runs a financial market where people trade contracts on real-world outcomes, not a casino. States say betting on events is betting, whatever the interface looks like.

Washington has picked a side. The Trump administration prefers that prediction markets answer only to the Commodity Futures Trading Commission, which puts it at odds with states like New York that want to regulate them as gambling. Reporting has also noted Trump family ties to both Kalshi and Polymarket.

A crowded regulatory calendar

The CFTC has its own open file on Polymarket. It is separately investigating after fraudsters tried to steal at least $10 million from the platform, Reuters reports.

Pressure is building abroad too, with European regulators pressing Polymarket and Kalshi over EU authorization. For now, Polymarket keeps operating while New York asks a judge to decide whether a prediction is a trade or a bet.