New York state filed a lawsuit on September 24 against Polymarket, a prediction market platform, alleging it operates an unlicensed gambling operation in violation of state law. The legal action, led by Attorney General Letitia James, seeks to block Polymarket’s operations in New York, impose fines, forfeit all illegal gains, and compel restitution to users.
The lawsuit follows a broader enforcement push by New York officials, who have previously sued other prediction markets, including Kalshi, Coinbase, and Gemini Titan, for similar alleged violations. Governor Kathy Hochul stated in a release that Polymarket’s operations put New Yorkers at risk, particularly underage individuals vulnerable to problem gaming.
Polymarket, which launched its U.S.-dedicated platform in December 2025, initially focused on sports betting before expanding to prediction markets on a wide range of events, including the 2026 Nobel Peace Prize winner and Time magazine’s Person of the Year. The company reports over $1 billion in annual revenue, though the lawsuit alleges it has failed to pay taxes like licensed casinos and sports gambling platforms, which fund public schools, youth sports programs, and problem gambling education.
In response, Polymarket said it was open to discussions with state officials. Neal Kumar, the company’s Chief Legal Officer, stated, “We chose to engage with them directly on the substance and address their concerns. They preferred the media hit.” The company emphasized its willingness to cooperate, noting its door remains open for further dialogue.
The lawsuit highlights an ongoing legal and regulatory clash over whether prediction markets constitute gambling subject to state laws or financial products regulated federally. The outcome could set a precedent for how similar platforms operate across the U.S., as states and federal agencies continue to debate jurisdiction over these markets.