New York has sued Polymarket, accusing the prediction market platform of operating an illegal and unlicensed gambling business in the state. New York Attorney General Letitia James filed the lawsuit on September 24, 2026, escalating the state’s broader regulatory challenge against prediction markets and their growing role in sports and event betting.
The lawsuit targets QCX LLC, which operates Polymarket in the United States, and argues that the platform’s event contracts meet New York’s legal definition of gambling. State officials allege that Polymarket allows users to put money behind uncertain outcomes that they cannot control, while operating without a license from the New York State Gaming Commission.
New York Challenges Polymarket’s Prediction Markets
According to the lawsuit, Polymarket’s prediction markets allow users to wager on outcomes across sports and other events. New York officials argue that these contracts function as gambling because users risk money on uncertain outcomes in exchange for potential payouts.
The state also alleges that Polymarket allowed people between 18 and 20 years old to participate in its markets, despite New York requiring users to be at least 21 to participate in mobile sports betting. The Attorney General’s office says this creates additional consumer protection concerns around online gambling and problem gambling.
New York is seeking a court order that would prevent Polymarket from operating as an unlicensed gambling business in the state. The lawsuit also seeks civil fines, the forfeiture of gains that the state considers illegal, and restitution for affected customers.
Polymarket Pushes Back Against Lawsuit
Polymarket has disputed New York’s approach and expressed disappointment that state officials moved forward with litigation. Chief Legal Officer Neal Kumar said the company had been engaging with officials and wanted to address their concerns regarding consumer protection and the legality of its markets.
The lawsuit represents another major legal challenge for the prediction market industry. New York previously brought a similar case against rival prediction market operator Kalshi, while the state has also taken legal action involving Coinbase Financial Markets and Gemini Titan over allegations involving unlicensed gambling.
The dispute also highlights a wider regulatory conflict over who should oversee prediction markets in the United States. Some states argue that certain event contracts fall under state gambling laws, while the Commodity Futures Trading Commission has asserted federal authority over prediction markets. Federal appeals courts have issued conflicting decisions on the regulatory question, leaving the broader legal framework unsettled.
Prediction Markets Face Growing Regulatory Pressure
Polymarket returned to the U.S. market in December 2025 after more than three years outside the country. The platform has since become a prominent prediction market where users can trade contracts linked to sports, politics, cultural events and other outcomes.
New York’s lawsuit could add another important test to the growing debate over whether prediction markets should be treated as financial markets, gambling platforms, or a combination of products subject to different regulatory regimes. The outcome could affect how prediction market companies operate in New York and potentially influence similar disputes in other states.
For Polymarket, the immediate legal issue is whether its event contracts can operate in New York without a state gambling license. The company will now have an opportunity to challenge the allegations in court, while state officials seek restrictions, financial penalties and restitution.
