New York Attorney General Letitia James and Governor Kathy Hochul have sued Polymarket’s U.S. business, alleging that the platform is operating an unlicensed gambling business in the state.
The lawsuit was filed against QCX LLC, which does business as Polymarket US. The state is asking the court to stop the company from operating in New York without a gambling license. It is also seeking the return of what it describes as illegally earned gains, restitution for customers and penalties equal to three times those gains.
Polymarket launched its U.S. platform in December 2025 with markets that allowed users to put money on the outcomes of sporting events. At the time, the company said it planned to expand into other categories as well.
According to New York, those contracts qualify as gambling under state law because users are wagering money on events with uncertain outcomes. The suit also says Polymarket allows people aged 18 to 20 to use the platform, even though New York requires users to be at least 21 to take part in mobile sports betting.
A Polymarket spokesperson did not immediately respond to a request for comment.
The case adds to a wider dispute between prediction market firms and state gambling regulators over who has the authority to oversee these products. Prediction market companies argue that their event contracts are financial products that should be regulated at the federal level by the Commodity Futures Trading Commission (CFTC). States, particularly when sports-related contracts are involved, take the view that the products are effectively bets and must comply with state gambling laws.
New York has been one of the most active states in that fight. In July, the state also sued Kalshi after talks between the company and Kathy Hochul’s office broke down, seeking as much as $36 billion in penalties and disgorgement. A number of similar cases have already reached appeals courts, and a recent dispute between Kalshi and New Jersey has been appealed to the U.S. Supreme Court.
“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 a statement.
The lawsuit comes less than a year after Polymarket returned to the U.S. market.
