New York Wants to Ban Polymarket, Lawsuit Calls It ‘Illegal Gambling Operation’

New York has taken legal aim at Polymarket, with Attorney General Letitia James and Governor Kathy Hochul announcing a lawsuit Wednesday that accuses the prediction market of running an unlicensed gambling business in the state.

The suit, filed against QCX LLC doing business as Polymarket US, alleges the platform’s markets meet New York’s legal definition of gambling because users bet money on uncertain outcomes outside their control.

Polymarket launched in the U.S. in December 2025, offering wagers on sporting events and, in the company’s own pitch, markets on “everything.” The attorney general’s office said its investigation found the platform is an illegal, unlicensed operation that exposes New Yorkers, including those under the legal gambling age of 21, to serious financial and personal risk.

“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support,” James said in a statement, noting that gambling laws fund educational and public benefit programs. Hochul added that Polymarket had “put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.”

The state is asking a court to bar Polymarket from operating in New York, force it to forfeit its gains, pay restitution to users, and pay fines equal to three times what it earned through the alleged conduct.

Officials argued the company sidestepped licensing and the taxes that regulated casinos and mobile sportsbooks pay.

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Prediction markets let users buy and sell contracts tied to the outcome of real-world events, from elections and sporting results to economic data. Each contract resolves to a fixed value when the event concludes, typically settling at $1 if the outcome occurs and $0 if it doesn’t. That turns a contract’s live price into an implied probability: one trading at 60 cents reflects roughly a 60% chance.

As a business, the sector has surged from a crypto-native curiosity into a mainstream category. Kalshi and Polymarket have both ballooned to multi-billion-dollar valuations after massive fundraises, and analysts at Bernstein have projected prediction-market trading volumes could reach $1 trillion by 2030, with revenue near $10.8 billion.

New York’s action today extends an aggressive campaign by James and Hochul against prediction markets. The pair sued rival Kalshi in July, with the attorney general seeking $36 billion over what she likewise called illegal gambling.

New York also sued Coinbase and Gemini in April over their prediction offerings, part of a wave of state-level challenges that has swept into Kentucky, Illinois, and others.

The platforms have generally argued they operate as federally regulated venues under the Commodity Futures Trading Commission, a jurisdictional clash the Donald Trump administration has waded into on the industry’s side.

The fight comes as the CFTC itself has grown wary of at least some event contracts, with staff recently warning that “mention” contracts invite manipulation.