New York Attorney General Letitia James filed a lawsuit against Polymarket on Thursday (24), accusing the platform of operating an unlicensed betting business in the state. The lawsuit comes about two months after a similar action against rival Kalshi and widens the dispute over who can regulate prediction markets in the United States.
The Attorney General's Office asks the court to prevent Polymarket from continuing to offer the service without authorization from the New York State Gaming Commission. The state also seeks fines, return of gains considered illegal and restitution to users. According to the office, the penalties can reach three times the gains obtained through the contested operations.
New York argues that the contracts offered by the platform fall under the state's definition of gambling because they allow betting on uncertain outcomes beyond the user's control. Polymarket offers markets tied to sports, elections and other future events.
Another point of the lawsuit is the age of users. The platform allows access to people 18 to 20 years old, while New York law requires a minimum age of 21 for mobile sports betting. The Attorney General's Office states that the absence of state oversight reduces the protections applied to licensed operators.
Dispute over prediction markets widens
The lawsuit against Polymarket follows the case filed by New York against Kalshi on July 31, also under the accusation of operating betting without a license. In April, the state had already sued Coinbase Financial Markets and Gemini Titan for similar services.
The dispute, however, goes beyond New York. The Commodity Futures Trading Commission (CFTC) maintains that prediction markets based on event contracts fall under its federal jurisdiction, while states argue that certain products remain subject to local betting laws. Federal courts have been analyzing this division of authority.
Polymarket returned to the U.S. market in December 2025, after remaining outside the country for more than three years. The company told Reuters it was disappointed with the lawsuit and said it had maintained contact with state authorities to discuss regulatory concerns.
