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New York has taken Polymarket to court, adding another major prediction market operator to its growing legal fight over sports event contracts.
Attorney General Letitia James and Gov. Kathy Hochul filed the case against QCX LLC, which operates Polymarket US, on September 24. State officials argue that Polymarket offers sports bets without a New York gambling license, while prediction market operators maintain that federal commodities law governs their contracts.
Good to Know
The Polymarket case sits inside a much wider jurisdiction battle.
New York sued Coinbase and Gemini in April over event contracts, then filed a separate case against Kalshi in July. The state has treated sports prediction markets as gambling products that require approval under New York law.
The CFTC takes the opposite position for registered contract markets. In April, the federal regulator sued New York and argued that the Commodity Exchange Act preempts state gambling enforcement against CFTC regulated platforms.
Polymarket now becomes another test case in that state versus federal dispute.
New York officials say Polymarket sports contracts qualify as bets because customers put money on uncertain outcomes outside their control. The state also says Polymarket operates without a New York State Gaming Commission license and does not pay the gambling taxes required from licensed operators.
James said:
“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs.”
New York also focuses heavily on Polymarket access for customers aged 18 to 20.
State regulated mobile sports betting requires customers to be at least 21. The lawsuit alleges that Polymarket lets younger adults access sports event contracts despite that state age limit.
Hochul said:
“I will always stand up for New Yorkers when bad corporate actors prey on consumers and threaten tax dollars that fund schools and critical public services.”
Polymarket has meanwhile built a growing sports presence. The New York Yankees entered a marketing partnership with the platform in August, less than two months before the lawsuit. Several other MLB teams have also worked with prediction market companies.
That commercial growth comes while regulators and courts continue debating whether sports event contracts belong under gambling law or federal derivatives law.
New York also took issue with Polymarket marketing that positioned the platform as “bad news” for sportsbooks.
James wants the court to stop Polymarket from operating in New York without a gambling license.
The state also seeks forfeiture of alleged unlawful gains, restitution for affected customers and financial penalties. The complaint asks for damages equal to three times gains linked to the alleged violations and a $100,000 penalty for each alleged offer or attempted offer of sports betting in New York.
The enforcement campaign extends well beyond Polymarket.
New York accuses Kalshi of similar conduct, while the April cases against Coinbase and Gemini also focus on prediction markets that state officials classify as unlicensed gambling.
Federal regulators continue challenging that approach. The CFTC says Congress created a nationwide derivatives framework and that individual states cannot separately regulate event contracts listed on federally registered markets.