Governor Hochul and Attorney General James seek to shut down the prediction market's New York business, recover its gains and impose triple damages.
New York State sued Polymarket on Thursday, accusing the prediction market of running an illegal gambling operation that lets underage users bet on uncertain outcomes without a state license.
Governor Kathy Hochul and Attorney General Letitia James announced the lawsuit against QCX LLC, which operates as Polymarket US. The complaint seeks a court order halting the company's unlicensed operations in New York, forfeiture of its gains, fines of up to three times the damages and restitution for consumers.
The state's case
New York's argument rests on the definition of gambling. Because the outcomes of Polymarket's event contracts are uncertain and outside the bettor's control, the state contends they are wagers, and anyone offering wagers in New York needs a license from the State Gaming Commission. Polymarket does not have one.
The complaint makes three further claims. It says Polymarket avoids the taxes licensed operators pay, that it allows users aged 18 to 20 to trade even though New York requires mobile sports bettors to be 21, and that this exposes young people to gambling harms including depression, anxiety and financial stress.
"By running an unlicensed gambling operation, Polymarket has done more than knowingly violate state law, they put New Yorkers at risk, especially underage," Hochul said.
"By skirting New York's laws, Polymarket targets the vulnerable and deprives families of critical services," James said.
A second front
The suit is New York's second against a major prediction market, coming two months after the state sued Kalshi. Polymarket has responded with a countersuit challenging the state's gambling characterization.
The core conflict
Prediction markets argue their products are federally regulated financial instruments, falling under the Commodity Futures Trading Commission rather than state gaming regulators. States counter that a contract paying out on a sporting event or election is a bet regardless of the wrapper. New York's age argument is a pointed addition: it frames the dispute not only as a question of jurisdiction and tax revenue but as consumer protection, which tends to carry weight with judges.
Why it matters
The case adds to a growing legal map. A petition asking the Supreme Court to settle whether states can regulate sports event contracts is pending, and state actions like New York's increase pressure for a definitive answer. If New York wins an injunction, other states with strict gaming regimes would have a template to follow, and the national model prediction markets have built could fracture into a state-by-state patchwork.