New York Sues Polymarket Over Unlicensed Gambling Claims

New York sued prediction market Polymarket on Thursday, arguing the platform is an unlicensed gambling operation and asking a judge to block the company from operating in the state.

The state filed the lawsuit in state court. New York officials want Polymarket to face fines and to pay restitution to users because the platform never obtained a state gaming license.

The case is the latest legal challenge from a state moving to rein in popular, now-ubiquitous betting apps that let people wager on almost anything — sports, weather, elections and technology. New York has already sued other platforms, including Kalshi, Coinbase and Gemini, using a similar argument.

"By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming," Gov. Kathy Hochul said in a statement.

Polymarket is pushing back. "We'll fight for our users," Chief Legal Officer Neal Kumar said in a statement.

"Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. We believe in New York and we're staying here," Kumar said.

The dispute turns on a fundamental question: who regulates prediction markets — the states or Washington. The platforms argue states lack authority over them because they fall under federal regulation by the U.S. Commodity Futures Trading Commission. The CFTC, which has opposed state regulation of the platforms, did not immediately return a request for comment.

Polymarket and its peers draw a sharp line between their business model and traditional gambling. On their platforms, consumers trade against other consumers, similar to how stock markets work. Participants buy and sell contracts tied to the probable outcome of an event. The platforms say prices are set by trading activity and that they only take a fee from each transaction.

That structural argument has not stopped state enforcers. New York's case against Polymarket follows its earlier actions against Kalshi, Coinbase and Gemini, signaling a coordinated effort to bring betting-style platforms under state gaming law. Each suit rests on the same claim: operating without a license.

For Polymarket, the stakes include both its legal footing and its identity as a New York company. Kumar's statement emphasized the firm's local roots and its more than 350 employees in the state — a workforce that could become a political lever as the litigation proceeds.

The outcome will likely hinge on whether courts accept the platforms' characterization as federally regulated trading venues rather than gambling operations. If New York prevails, Polymarket could face fines, restitution payments and an injunction blocking it from the state market — a precedent that would pressure the entire prediction market industry and sharpen the fight over federal versus state oversight.