Two months after New York officials sued Kalshi, they took Polymarket to state court in an attempt to stop the New York City-headquartered company from offering its sports prediction markets in the Empire State.
Polymarket responded the same day by suing the state in federal court.
Gov. Kathy Hochul and Attorney General Letitia James announced on Thursday, Sept. 24, that James filed a lawsuit in the Supreme Court of the State of New York against the company’s U.S. business QCX. They accuse Polymarket of running an illegal gambling operation in New York that has offered a sports betting equivalent in the state since December 2025 to users under the state’s legal gambling age of 21.
“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,” wrote Gov. Hochul in a statement. “Nobody is above the law in our state, and working with Attorney General James, we are fighting to protect New Yorkers and put this illegal operation to an end.”
New York lawsuits lists numerous requests
New York’s lawsuit against Polymarket references the dangers of exposing young people to gambling. It also highlights that prediction market companies registered with the Commodity Futures Trading Commission (CFTC) do not contribute to the state’s economy or social welfare by paying gaming taxes.
It also emphasizes that Polymarket’s sports markets in New York include games involving in-state college teams, something banned under New York’s gaming laws.
The state court lawsuit asks the court to order Polymarket to do several things, including:
- Permanently stop operating or marketing in the state
- Produce itemized records of customer transactions and pay full restitution to users
- Pay damages, disgorgement, a fine of three times the amount of its financial gain from violating New York laws, and penalty of $100,000 for every offering or attempt to offer sports wagering in New York
“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support,” said AG James. “My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”
Polymarket fights state’s ‘media hit’ with own federal lawsuit
In a statement provided to SBC Americas, Polymarket Chief Legal Officer Neal Kumar accused New York’s leaders of a “media hit” and emphasized the firm’s Big Apple roots.
“Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it,” said Kumar. “We believe in New York and we’re staying here.
“While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users. We didn’t run to preemptively sue the state — we chose to engage with them directly on the substance and address their concerns. They preferred the media hit. Any time the AG’s office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets.”
On Thursday evening, Polymarket sued James and other state officials in Manhattan federal court, asking a judge to block the state’s attempt to shut down its prediction market offering in its home state. The company called New York’s action “an extraordinary assertion of state power squarely foreclosed by federal law.”
NY litigation web gets more tangled
Those dueling lawsuits with different court jurisdictions further complicate the prediction markets litigation landscape in the largest sports betting market in the U.S.
As alluded to by Kumar’s “copy/paste” comment, New York’s lawsuit against Polymarket is similar to the one it filed against the company’s rival Kalshi in state court in late July, which seeks a total of $36bn.
The AG lodged the court complaint the very first day after a federal court denied Kalshi’s request for an injunction pending an appeal of its failed attempt to obtain an injunction against the New York State Gaming Commission (NYSGC). That federal court case was kickstarted by the gaming regulator sending Kalshi a cease-and-desist order in October 2025 and Kalshi suing in response days later.
Eleven days after New York sued Kalshi, the CFTC responded to a petition for relief from Kalshi by issuing an emergency order instructing the company to continue operating in the Empire State despite federal court orders.
James’ office subsequently wrote to the federal court to criticize the CFTC’s actions and ask judges not to let the intervention have any bearing on Kalshi’s preliminary injunction proceedings.
Separately, the CTFC also filed its own federal court lawsuit against New York in April, a week after James sued Coinbase and Gemini on behalf of the state back in April for running “illegal gambling platforms.”
New York sports teams sign up prediction markets
New York’s legal action against prediction market leaders has ramped up at a time when those companies have been getting more exposure through major partnerships in the state.
- Polymarket partnered with the NHL’s New York Rangers and Madison Square Garden in January
- Kalshi also became an official prediction market partner of Madison Square Garden in May, a collaboration that included a new “Kalshi Concourse” within the stadium
- Novig teamed up with the New York Mets in July
Most recently, Polymarket unveiled a deal with the New York Yankees in August that includes Polymarket signage behind home plate and in other locations at Yankee Stadium, branding on Yankees’ local broadcasts, and exclusive fan experiences. Yankees SVP of Partnerships Michael Tusiani said at the time that “we look forward to elevating Polymarket’s brand awareness.”
Polymarket also has nationwide partnerships with several leagues that host New York teams, including the NHL, MLB, and Major League Soccer.
