New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit on Thursday alleging that Polymarket‘s U.S. prediction market is an unlicensed gambling operation. Polymarket answered the same day by moving the case to federal court and suing state officials, CNBC reported.
The state’s petition, filed in New York State Supreme Court in Manhattan against QCX LLC, which does business as Polymarket US, argues that each event contract is a bet under state law. It says the New York State Gaming Commission has not licensed the company “in any capacity.”
“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” James said in the announcement.
What New York Is Asking For
The state wants a court to permanently bar Polymarket from operating in New York without a license and to order an accounting of bets and customer losses, restitution, disgorgement, a penalty of three times its gains and $100,000 for each unauthorized offer of sports wagering.
The petition says the platform lets 18- to 20-year-olds trade although New York sets 21 as the minimum age for mobile sports betting. It also cites contracts on games involving New York college teams, such as a Sept. 3 football game between Buffalo and Albany, which even licensed sportsbooks in the state may not offer. Other examples include markets on the New York governor’s race and on eliminations from the reality show Big Brother. The state also alleges violations of the federal Wire Act.
Polymarket Sues Back
Polymarket’s federal suit against James and New York State Gaming Commission officials argues that states cannot regulate its event contracts, which it treats as swaps, according to CNBC. The suit said it seeks to “prevent imminent and irreparable harm arising from New York’s enforcement of state gambling laws against federally regulated derivatives exchanges” and called the state’s position an “erroneous theory,” CNBC reported.
“While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users,” Polymarket Chief Legal Officer Neal Kumar said in a statement quoted by CNBC. “We believe in New York and we’re staying here.”
A Growing Fight Over Jurisdiction
The case follows New York’s July lawsuit against Kalshi and its April action against Coinbase and Gemini, which it said ran illegal gambling platforms. The CFTC has sued New York and other states over limits on sports event contracts, and New Jersey asked the Supreme Court this month to decide whether states can regulate those contracts when they trade on CFTC-registered exchanges.
Related Listen: CME vs. Kalshi. Is Washington Picking a Winner in Prediction Markets?
