New York sues Polymarket over alleged illegal gambling operation

New York Attorney General Letitia James has sued Polymarket, alleging the prediction market operates an illegal and unlicensed gambling business in the state.

The lawsuit targets QCX LLC, which operates Polymarket US, and seeks a court order preventing the company from operating without a New York gambling license. The state is also seeking fines, restitution for users and the forfeiture of gains it alleges were generated illegally.

New York argues that Polymarket’s event contracts qualify as gambling because users wager money on uncertain outcomes outside their control. The state also alleges the platform allows users between 18 and 20 years old to participate even though New York requires users to be at least 21 for mobile sports betting.

Polymarket returned to the US market in December 2025 and offers contracts tied to sports, elections, politics and other events.

The lawsuit expands a broader state level fight over prediction markets. James filed a similar case against Kalshi in July and previously brought actions against prediction market businesses operated by Coinbase and Gemini.

The dispute also highlights an unresolved question over who has authority to regulate the industry. The Commodity Futures Trading Commission has argued that federally regulated event contracts fall under its exclusive jurisdiction, putting it at odds with states seeking to apply their gambling laws.

Federal appeals courts have reached different conclusions in related cases. In August, an appeals court ruled that Kalshi could not block Nevada regulators from overseeing its prediction markets, adding to the possibility that the jurisdictional question could eventually reach the Supreme Court.

Prediction markets have grown rapidly since the 2024 presidential election, when platforms including Polymarket drew attention for market prices that pointed to a Donald Trump victory ahead of the result. The industry has since expanded heavily into sports and other event contracts.