Key points

  • New York alleges Polymarket offers unlicensed event contracts that meet the state's definition of gambling.
  • The state seeks an injunction, an accounting, restitution, disgorgement and statutory penalties.
  • Polymarket disputes the state's position, and the allegations have not been decided by a court.

New York has sued QCX LLC, which does business as Polymarket US, alleging that the prediction-market operator runs an unlicensed gambling business in the state. Attorney General Letitia James and Governor Kathy Hochul announced the case on September 24. The filing asks a state court to stop the company from operating without a New York gaming license and to impose financial remedies. The allegations have not been proven.

State treats event contracts as wagers

The verified petition argues that Polymarket's contracts fit New York's legal definition of gambling because users risk money on uncertain future events outside their control. It says the platform accepts contracts tied to sports, elections and culture while lacking a license from the New York State Gaming Commission. The state also alleges violations of New York constitutional, penal and racing-law provisions, as well as the federal Wire Act.

Related reporting: Underdog sues Connecticut over sports prediction-market crackdown

New York's complaint focuses heavily on sports markets. It cites promotions involving professional and college teams and alleges that Polymarket advertised its service to people in the state. The filing also says the platform allows customers aged 18 to 20 to participate, while New York requires mobile sports-betting customers to be at least 21. Those claims form part of the state's consumer-protection case rather than a final judicial finding.

New York seeks broad relief

The attorney general is requesting a permanent injunction against unlicensed operation in New York, along with an accounting of bets, customer losses and money paid to the company. The petition also seeks restitution, disgorgement, damages and penalties. One cited state provision permits a penalty of three times the gain from the alleged illegal conduct, while another authorizes $100,000 for each unauthorized offer or attempt to offer sports wagering. The court will determine whether any remedy is justified.

Polymarket pushes back

Polymarket has rejected the state's characterization. The Block reported that Chief Legal Officer Neal Kumar said the company would remain in New York and had been working with officials to address concerns. His response framed the platform's markets as fair, transparent and legal. The company now has an opportunity to answer the petition formally and contest both the allegations and New York's requested relief.

A wider state-federal conflict

The case adds to a widening dispute over whether event contracts offered through federally regulated markets can also be restricted under state gambling laws. New York sued Kalshi in July over similar allegations, and other states have pursued prediction-market operators. Platforms have generally argued that the Commodity Exchange Act gives the Commodity Futures Trading Commission primary authority, while states maintain that sports-linked contracts fall within their traditional gambling powers. Courts have not produced a single nationwide answer.

Why the case matters

The immediate impact is concentrated in New York, but the litigation could influence how prediction markets design access controls, age checks, advertising and state-by-state availability. It also raises compliance questions for brokers and other companies that distribute event contracts. A ruling for New York could encourage more state enforcement, while a successful federal-preemption defense could strengthen the industry's effort to operate under a national commodities framework.

For now, the practical change is a lawsuit, not a shutdown order or final ruling. Polymarket remains accused rather than adjudged liable, and the court has not granted the injunction requested by the state. The next significant developments will be the company's formal response and any interim court decision governing access while the case proceeds.

Sources

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