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, asserting that its U.S. prediction market breaches state gambling statutes. Governor Kathy Hochul and Attorney General Letitia James stated that the platform functions without authorization from the New York State Gaming Commission. The state aims to secure financial penalties alongside an injunction limiting Polymarket’s activities.
This litigation intensifies an ongoing debate concerning the oversight of prediction markets. Although Polymarket US maintains federal registration as a designated contract market under the Commodity Futures Trading Commission, New York contends that this federal status does not override local gambling regulations.
New York Alleges Polymarket is Operating Illegal Gambling
James asserted that Polymarket operates an unlawful gambling enterprise and actively evades state regulations.
A press release from the Attorney General’s Office indicated that an investigation revealed Polymarket exposes individuals in New York—including minors under the legal betting age—to financial and personal dangers.
While New York sets the legal gambling age at 21, Polymarket permits individuals 18 and older to create accounts 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 legal action requests an injunction to halt the prediction platform’s operations within the state. Furthermore, it demands that Polymarket suspend all advertising activities until it completes proper registration.
Additionally, New York is pursuing financial penalties against Polymarket, user restitution, and the forfeiture of all profits.
Governor Hochul likewise stressed on X that prediction platforms constitute gambling, 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 legal challenge against Polymarket represents only the newest enforcement effort directed at prediction market operators. In July 2026, New York filed a comparable lawsuit against Kalshi, following similar complaints previously brought against Gemini and Coinbase.
Furthermore, the governor signed an executive order in April 2026 prohibiting state employees from participating in insider trading via prediction platforms.
New York is not alone in its enforcement efforts, as more than 10 states have initiated legal proceedings against prediction platforms on the grounds that they provide unauthorized gambling.
A significant portion of these legal challenges centers on sports betting, which states maintain falls squarely within their regulatory purview. Prediction markets initially gained traction surrounding the 2024 U.S. elections, but sporting events currently drive the bulk of their trading volume.
Conversely, the Commodity Futures Trading Commission (CFTC) has supported prediction market companies, maintaining that their offerings qualify as derivatives and are therefore subject to federal authority.
Judicial opinions regarding sports betting and prediction markets remain split. With conflicting decisions even among federal appeals courts, the Supreme Court will likely need to resolve the issue ultimately.
This article is for informational purposes only and does not constitute legal, financial or investment advice. The allegations remain subject to ongoing litigation.