The lawsuit, filed by James’s office, claims that Polymarket’s “prediction markets” meet the legal definition of gambling because “the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.”
New York is suing Polymarket over allegations that the platform constitutes an illegal gambling operation under state law.
In a press release, Gov. Kathy Hochul said that, when it first launched in December 2025, Polymarket advertised itself as a “service that allowed users to bet money on the outcome of sporting events, promising users ‘sports—followed by markets on everything.’”
An investigation led by New York Attorney General Letitia James’s office found that Polymarket’s so-called “prediction market” is little more than ill-disguised gambling. Notably, however, Polymarket lets most adults, including those under the age of 21, to place wagers on a wide variety of real-world events and outcomes.
“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,” Hochul said in a statement. “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. Nobody is above the law in our state, and working with Attorney General James, we are fighting to protect New Yorkers and put this illegal operation to an end.”
The lawsuit, filed by James’s office, claims that Polymarket’s “prediction markets” meet the legal definition of gambling because “the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.”
“Despite this,” the state says, “Polymarket has failed to obtain a license from the New York State Gaming Commission, sidestepping its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do. This tax revenue from gambling regulation funds public schools, sports programs for underserved youth and problem gambling education and treatment.”
Polymarket, in response, has said that New York is threatening it with irreparable harm over an “impossible choice,” namely that between obeying state-level regulators and continuing operations at the risk of potentially “huge” criminal liability. Consequently, the company has decided to counter-sue.
“This is an extraordinary assertion of state power squarely foreclosed by federal law,” Polymarket said in its countersuit. The company’s chief legal officer, Neal Kumar, said that Polymarket had earlier tried to coordinate with state officials, but “they preferred the media hit.”
“While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users,” Kumar said. “We didn’t run to preemptively sue the state—we chose to engage with them directly on the substance and address their concerns. They preferred the media hit. Any time the AG’s office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets.”
New York is continuing to litigate a similar claim against Kalshi, one of Polymarket’s chief rivals in the “prediction market” space.
Sources
New York, Polymarket sue each other over whether prediction markets are illegal gambling
New York sues Polymarket for running ‘illegal gambling operation’
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