New York, Polymarket file dueling lawsuits amid illegal gambling claims
New York attorney general accuses prediction market platform of targeting ‘most vulnerable’ residents.
The US state of New York and prediction market company Polymarket have filed dueling lawsuits amid claims the betting platform is in violation of gambling laws.
In a lawsuit filed on Thursday, New York State Attorney General Letitia James said that Polymarket has been operating as an unlicensed gambling operation due to its failure to obtain a licence from the New York State Gaming Commission.
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The move comes after James’ office launched similar suits against Polymarket competitors Kalshi, Coinbase and Gemini Titan.
“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 announcing the suit.
“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support. My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”
The suit also alleges that the company encouraged gambling among young people.
It accuses Polymarket of targeting users as young as 18, while state law requires users to be at least 21 years old to take part in mobile sports betting.
“By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming,” New York Governor Kathy Hochul said in a statement.
The more than 30-page lawsuit claims that Polymarket, which is valued at more than $20bn, has advertised sports betting in particular since July 2025.
It pointed to a post on X from August 17, 2025, about the launch of its US mobile app that said it was “BAD NEWS (For sportsbooks)”.
Polymarket filed a countersuit hours later, arguing the federal Commodity Futures Trading Commission has exclusive authority to regulate prediction markets.
The betting platform said New York had left it with an “impossible choice” between obeying state regulators, or continuing operations and facing potentially “huge” criminal liability.
“This is an extraordinary assertion of state power squarely foreclosed by federal law,” Polymarket said in its lawsuit in Manhattan federal court.
Chief Legal Officer Neal Kumar said Polymarket tried to work out its differences with state officials, but “they preferred the media hit”.
“We chose to engage with them directly on the substance and address their concerns,” Kumar said.
Polymarket’s main rival Kalshi is facing similar allegations in New York.
Kalshi has been critical of reporting on lawsuits against it and allegations that it is akin to a sports betting or gambling platform.
Polymarket did not respond to Al Jazeera’s request for comment.
The Polymarket lawsuit comes days after reporting from the Wall Street Journal that alleged a wave of users had linked stolen bank debit cards and then used them to make wagers, effectively draining the accounts.
According to the report, when CEO Shayne Coplan was made aware of the issue, he responded: “Just keep growing and pay a fine if regulators ever find out.”
Political pressure
Prediction markets allow users to wager on so-called event contracts, covering political events, sports, elections and even award shows.
Concerns about the role of prediction markets came to a head earlier this year when wagers were made in the hours before the United States and Israel first struck Iran, prompting widespread backlash in Washington.
New York’s lawsuit joins a growing list of states that have sued prediction market platforms, including Arizona, Massachusetts, Nevada and many others.
Those states are at odds with the federal government, as the Commodity Futures Trading Commission has claimed that the federal agency exerts authority over the regulation of prediction markets.
Polymarket has close ties with the family of US President Donald Trump.
The prediction market platform has investment from 1789 Capital, a venture capital firm backed by Donald Trump Jr, the president’s eldest son, who also serves on the company’s advisory board.
