Key Insights
- Polymarket faces a New York lawsuit alleging it operates an unlicensed gambling business.
- New York says users aged 18–20 can access markets despite a 21-year sports-betting minimum.
- The case deepens a dispute over state gambling laws and federal derivatives regulation.
On Sept. 24, New York filed a lawsuit against Polymarket, claiming its U.S. prediction market breaches state gambling statutes. Governor Kathy Hochul and Attorney General Letitia James stated that the platform runs without authorization from the New York State Gaming Commission. The state requests financial penalties alongside an injunction limiting Polymarket’s activities.
This litigation intensifies ongoing disagreements regarding the regulation of prediction markets. Although Polymarket US maintains federal registration as a contract market designated by the Commodity Futures Trading Commission, New York contends this registration does not override state gambling regulations.
New York Alleges Polymarket is Operating Illegal Gambling
James asserted that Polymarket operates an unlawful gambling site and avoids compliance with state statutes.
The Office of the Attorney General issued a statement asserting that its probe indicates Polymarket exposes residents—including individuals under the legal gambling age—to personal and financial hazards.
While New York requires individuals to be 21 to gamble, Polymarket permits users aged 18 and older to sign up and participate.
“By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law; they have put New Yorkers at risk,” James stated.
The complaint asks the court to prevent the prediction platform from functioning within the state and to halt its promotional activities until it achieves proper registration.
Furthermore, New York seeks financial penalties, user restitution, and the forfeiture of all profits.
Governor Hochul addressed the issue on X, writing, “Calling it a ‘prediction market’ doesn’t change the facts. If you’re taking bets in New York, our gambling laws apply.”
Prediction Market Faces Stiff Opposition from US States
The action against Polymarket represents the latest legal challenge directed at prediction market operators. In July 2026, New York filed a comparable lawsuit against Kalshi, following prior legal moves against Gemini and Coinbase on identical grounds.
Additionally, the governor signed an executive order in April 2026 prohibiting state employees from participating in insider trading via prediction services.
New York is not isolated in its efforts; more than 10 states have initiated legal proceedings against prediction websites, accusing them of providing unauthorized gambling services.
These legal challenges primarily focus on sports betting, which states maintain falls under local authority. Although the 2024 U.S. elections initially drove the popularity of prediction markets, sports contracts presently comprise the bulk of their trading volume.
Conversely, the Commodity Futures Trading Commission (CFTC) has supported prediction platforms, asserting that their offerings constitute derivatives governed by federal rules.
Judicial opinions on prediction markets and sports wagering remain split. Given that federal appeals courts maintain differing perspectives, the Supreme Court will likely need to issue a final ruling.
This article is for informational purposes only and does not constitute legal, financial or investment advice. The allegations remain subject to ongoing litigation.
Frequently Asked Questions
Why is New York suing Polymarket?
New York alleges that Polymarket operates an illegal gambling business within the state without a license from the New York State Gaming Commission, and that it exposes underage users to financial risk.
What is the legal age difference cited in the lawsuit?
New York enforces a legal gambling age of 21, whereas Polymarket permits users who are 18 and older to register and access its platform.
What is the conflict between state and federal oversight?
While Polymarket US holds registration as a Commodity Futures Trading Commission-designated contract market—which the CFTC views as federal derivatives regulation—state officials argue that local gambling laws still apply to bets taken within New York.
Are other states taking action against prediction markets?
Yes, more than 10 states have taken legal steps against prediction platforms, alleging they offer unlawful gambling, particularly surrounding sports betting.