New York Attorney General Letitia James, acting alongside Governor Kathy Hochul, filed a lawsuit on Thursday against QCX LLC, doing business as Polymarket US, accusing the prediction market platform of operating an illegal gambling business in violation of state law without a licence from the New York State Gaming Commission [Source: New York Governor's Office]. James is asking the court to order Polymarket to forfeit all illegal gains, distribute restitution to consumers, and pay fines equal to three times the gains the company made through its alleged illegal actions. The state is also seeking a $100,000 penalty for each alleged unauthorised offer or attempted offer of sports wagering in New York [Source: amNewYork].
The lawsuit contends that Polymarket's event contracts meet the state's definition of gambling because outcomes are uncertain and outside the control of the bettor. Among the specific allegations, the complaint claims Polymarket allowed users aged 18 to 20 to trade sports markets despite New York requiring mobile sports bettors to be 21. The attorney general's office cited the example of a New York-based bettor spending $3.01 including fees on 6.39 contracts predicting the New York Mets would beat the Atlanta Braves in a July game, with the account receiving $6.39 after the Mets won [Source: amNewYork].
Polymarket responded the same evening, filing its own suit against James and other state officials in Manhattan federal court seeking to block the state from regulating its prediction market. Chief Legal Officer Neal Kumar said the platform would fight the case, describing the state's action as a 'copy/paste recycled lawsuit' and saying the company had chosen to engage with the state directly on the substance [Source: CNBC]. Polymarket US, which debuted in December 2025 and operates through QCX, a Commodity Futures Trading Commission-designated contract market, has more than 350 employees in New York. CFTC Chairman Michael Selig said CFTC-registered exchanges had faced 'an onslaught of state lawsuits seeking to limit Americans' access to event contracts' and that the CFTC would not allow 'overzealous state governments to undermine the agency's authority' [Source: Washington Examiner].
Thursday's action is part of a broader enforcement campaign by New York's top officials against prediction market platforms. James and Hochul filed a similar lawsuit against rival platform Kalshi in July 2026, and in April 2026 James sued Coinbase and Gemini for allegedly running illegal gambling platforms. That same month, Governor Hochul signed an executive order banning state employees from using prediction markets for insider trading [Source: New York Governor's Office]. At the national level, at least 20 states have argued this year that prediction platforms' sports-related event contracts constitute illegal betting under local gambling laws. The suits have targeted an industry whose popularity surged after prediction markets outperformed pollsters in forecasting the outcome of the 2024 presidential election. The New York legal action came less than two months after the New York Yankees entered a marketing partnership with Polymarket [Source: Covers].
Sources: New York Governor's Office, CNBC, amNewYork, ABC News, Reuters, Washington Examiner, Yahoo Finance, MS NOW, Covers