New York is asking a court to prevent Polymarket from operating in the state without a gambling license and to recover proceeds officials allege were illegally generated.
New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit Thursday against QCX LLC, the company operating Polymarket’s U.S. platform, claiming it is conducting an unauthorized gambling business in the state.
The complaint seeks an order stopping Polymarket US from operating without a state gambling license. New York is also seeking the surrender of allegedly unlawful proceeds, restitution for affected customers and penalties worth three times the gains the state says Polymarket generated.
Polymarket brought its U.S. platform back online in December 2025, initially offering contracts tied to sports outcomes. The company said at the time that it expected to expand into additional prediction market categories.
According to New York officials, the contracts fall under the state’s definition of gambling because participants risk money on uncertain outcomes. The state also alleges that Polymarket allows people aged 18 to 20 to trade on its platform, even though New York law requires participants in mobile sports betting to be at least 21.
Polymarket did not immediately respond to a request for comment.
The lawsuit is the latest development in a broader regulatory dispute over whether prediction markets should be treated as federally regulated financial products or as state-regulated gambling services.
Prediction market operators argue that their event contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC). State authorities, particularly over sports-related contracts, have argued that such products function as wagers and therefore must comply with state gambling laws.
New York has played a prominent role in the dispute. The state sued Kalshi in July after negotiations with Hochul’s office broke down, seeking up to $36 billion in penalties and disgorgement. Several cases involving prediction markets have advanced through appeals courts, while a separate dispute between Kalshi and New Jersey has been appealed to the U.S. Supreme Court.
James said New York’s gambling regulations are intended to protect residents, limit potential harms associated with problem gambling and support funding for education and other public programs.
The lawsuit arrives less than a year after Polymarket resumed operations in the U.S.
