New York sues Polymarket over alleged unlicensed gambling

New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit against Polymarket on Thursday. The lawsuit accuses Polymarket of operating an unlicensed gambling business in New York. The Attorney General's office concluded that users stake money on uncertain outcomes they cannot control. It said this meets New York's legal definition of gambling. The suit alleges that Polymarket never obtained a license from the New York State Gaming Commission. It also alleges that Polymarket avoided taxes paid by licensed casinos and mobile sportsbooks. Those taxes help fund public schools, youth sports programs and problem gambling treatment. The complaint says Polymarket accepts users aged 18 to 20. New York requires mobile sports bettors to be at least 21. James said Polymarket was targeting vulnerable people by avoiding New York's laws. Hochul said the company knowingly violated state law. Hochul also said the company put underage users at risk. New York is asking a court to bar Polymarket from operating as an unlicensed gambling business. The state wants Polymarket to forfeit its alleged illegal gains. The state wants Polymarket to repay harmed users. The state seeks fines equal to three times those gains. Polymarket and rival Kalshi argue that they are federally regulated exchanges. They describe their products as event contracts that are a type of derivative. They argue that the Commodity Futures Trading Commission should regulate them instead of state gaming authorities. The CFTC agrees with the platforms. The CFTC has joined their legal fight. In 2026, the CFTC sued nine states and argued that it should have exclusive nationwide authority over the industry. The lawsuit comes as the Securities and Exchange Commission and the CFTC work to regulate crypto-powered prediction markets. James and Hochul sued Kalshi in July. James sued Coinbase and Gemini in April over similar claims. Earlier this month, James secured $8 million from a leading sweepstakes casino operator. Polymarket launched in the United States in December 2025. It initially allowed users to bet on sporting events. The company planned to expand into markets covering a wide range of topics.