New York Sues Polymarket US Over Unlicensed Gambling and Prediction Markets
New York sued Polymarket US for operating an unlicensed gambling platform, sparking a legal battle over state authority versus federal regulation of prediction markets.
The State of New York has filed a lawsuit against the prediction market platform Polymarket US, alleging that the company operates an unlicensed gambling business within the state.
The lawsuit, filed on September 24 by the New York Attorney General, asserts that the prediction market platform allows users to wager on event outcomes, including sports, without acquiring a proper license. The state is seeking a court order to halt operations, impose fines, and compel the company to disgorge allegedly ill-gotten profits while compensating users.
The Core Dispute Over Prediction Markets
At the center of the controversy is how the product is defined. Polymarket presents its activity as a "prediction market," where users buy and sell contracts based on event outcomes. In contrast, New York argues that it functions practically as gambling, making the firm subject to state gambling laws. The complaint also highlights that users aged 18 to 20 can participate on the platform, whereas the legal minimum age for online sports betting in New York is 21.
"The state seeks to halt operations, impose fines, and compel the company to surrender allegedly unlawful profits from unlicensed wagering." — New York Attorney General
Federal Jurisdiction Versus State Regulation
Polymarket responded by filing a countersuit in a Manhattan federal court. The company contends that jurisdiction over prediction markets belongs to the federal government rather than the State of New York. This escalation transforms the dispute from a local licensing issue into a broader constitutional battle regarding state authority versus federal oversight over contract and event markets.
The action against Polymarket follows prior state enforcement targeting competitor Kalshi. In July, New York filed a similar lawsuit claiming it operated an unlicensed gambling business. Simultaneously, other U.S. states are evaluating or pursuing legal actions against platforms in this sector, while federal regulators examine whether prediction markets fall under derivatives market oversight.
