New York Attorney General Letitia James sued prediction-market company Polymarket on Thursday, accusing the platform of operating an illegal gambling business in the state. The case adds to growing legal pressure on prediction markets across the United States.
The lawsuit follows New York’s similar action against rival Kalshi in July. State officials have also targeted prediction-market operations linked to Coinbase and Gemini.
New York Targets Prediction Markets
James alleges that Polymarket’s event contracts amount to gambling under state law. The state argues that users wager money on uncertain outcomes without the licenses required for gambling operators.
Polymarket offers contracts tied to sports, politics, finance, culture and other events. The company has expanded rapidly as prediction markets have gained popularity, particularly since the 2024 U.S. presidential election.
The dispute centers on whether these contracts constitute financial products regulated federally or gambling products governed by state laws. That question has already triggered conflicts between state authorities and the federal government.
A Broader Regulatory Fight
The Commodity Futures Trading Commission has asserted federal authority over prediction markets, creating a direct jurisdictional conflict with states seeking to enforce their gambling laws. Federal appeals courts remain divided over the regulatory question.
The legal battle could have significant consequences for the prediction-market industry. Companies such as Polymarket and Kalshi argue that their event contracts operate within the federal derivatives framework rather than traditional sports betting.
New York officials, however, have focused on consumer protections and gambling restrictions. The state has raised concerns about access by younger users and the absence of state gambling licenses.
Polymarket’s legal exposure is also expanding beyond New York. The company faces other litigation and regulatory scrutiny over its U.S. operations, while prediction-market platforms broadly confront increasing challenges from state regulators.
The New York case now adds another major test of where financial contracts end and gambling begins. The outcome could influence how prediction markets operate across the country and determine which regulators ultimately have authority over the rapidly growing industry.
