New York Sues Polymarket, Eight Weeks After Kalshi, Seeking Triple Its Gains

New York's attorney general has filed a second state-court case against a prediction market, this time against Polymarket's US exchange, alleging an unlicensed gambling business open to 18-year-olds. The relief sought mirrors the Kalshi suit that drew the federal regulator into the fight in August.

• New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit on 24 September against QCX LLC, which trades as Polymarket US, alleging it runs an illegal, unlicensed gambling operation in the state
• The state asks the court to stop Polymarket operating as an unlicensed gambling business, and to order it to forfeit its gains, pay restitution to users and pay fines equal to three times those gains
• The complaint alleges Polymarket's markets are open to 18 to 20 year olds, although New York requires mobile sports bettors to be 21
• It is the attorney general's second suit against a prediction market in two months, after the 31 July case against Kalshi that the CFTC answered with an emergency order
• Polymarket US launched in December 2025, and the state says it has never been licensed by the New York State Gaming Commission

New York Opens a Second Front Against the Exchanges

Letitia James, the Attorney General of New York, and Governor Kathy Hochul announced on Thursday 24 September that the state has sued QCX LLC, the company that operates Polymarket's US exchange. According to the attorney general's announcement, an investigation by her office found that Polymarket's prediction market "is an illegal, unlicensed gambling operation" that exposes New Yorkers, including those under the legal gambling age of 21, to serious personal and financial risk. InGame reports that the complaint was filed in the Supreme Court of the State of New York.

The legal theory is the one New York used against Kalshi. The lawsuit alleges that Polymarket's markets meet the legal definition of gambling because the outcomes users bet on are uncertain and outside their control, or hinge on a game of chance, and that the company has never obtained a licence from the New York State Gaming Commission. The state says this lets Polymarket sidestep the taxes that licensed casinos and mobile sportsbooks pay, which fund schools, youth sport and problem gambling services.

The age point is new in emphasis. The complaint alleges that Polymarket's markets are available to users aged 18 to 20, although New York law sets 21 as the minimum age for mobile sports wagering. James said Polymarket was "targeting the most vulnerable"; Hochul said the company had "put New Yorkers at risk, especially those underage".

The state is asking the court to stop Polymarket operating as an unlicensed gambling business in New York, and to order it to forfeit all illegal gains, distribute restitution to users and pay fines equal to three times the gains. InGame, which reviewed the filing, reports that it also alleges the keeping of gambling records and a breach of the federal Wire Act, and seeks $100,000 for each offer of unauthorised sports wagering. No figure for Polymarket's New York revenue was disclosed. Polymarket had not publicly responded to the suit at the time of writing.

The Same Remedy That Brought the CFTC In

The case follows the pattern of the state's suit against KalshiEX LLC, filed on 31 July. In that case New York sought disgorgement of Kalshi's event-contract profits, a penalty of three times that amount and $36 billion in compensatory damages, and asked for an order barring Kalshi from offering contracts "relating to sports, culture, elections, and other events". Because Kalshi is headquartered in New York, the Commodity Futures Trading Commission (CFTC) read that as an order that would stop a federally registered exchange trading everywhere, and on 11 August it ordered Kalshi to keep operating. According to InGame, the Polymarket complaint asks for an injunction in similar terms, and Polymarket US is also based in New York.

The attorney general's release places the suit in a longer campaign: the Kalshi case in July, suits against Coinbase and Gemini in April, a settlement of $8 million with a sweepstakes casino operator this month, and an executive order from Hochul in April barring state employees from insider trading on prediction markets.

The Complaint Is Built to Survive the Federal Pre-emption Fight

The exchanges' defence in every state case has been that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over contracts traded on a registered exchange. New York's complaint leans on two things that argument does not reach easily: the minimum age, which is a state consumer protection rule rather than a question of what a swap is, and the tax base, which frames the harm as lost public revenue rather than an unlicensed product. Both give a state judge something to rule on without first deciding the federal question. The weakness is the same as in the Kalshi case: an injunction worded around "other events" and applied to a company headquartered in the state reaches well beyond New York, and that is exactly what persuaded the CFTC to intervene in August. If it does so again, New York will have two cases that test the same federal emergency power.

Polymarket Is the Harder Target Politically

Polymarket arrived in the regulated US market late, in December 2025, and has pursued a high public profile since, including an endorsement deal with LeBron James that Front Office Sports reports is worth $15 million a year. That visibility supports the state's case, because the complaint is about who is being drawn in, and the age allegation is the sharpest part of it. It also means a court order would land on a brand that has been lobbying London and Brussels to be treated as a financial service rather than a gambling one, and whose political connections have drawn scrutiny in the Senate. New York is now asking its courts to decide, for the second time in two months, a question the federal courts have not settled.

New York has chosen to fight the exchanges one at a time, in its own courts, on its own licensing and age rules. Whether the CFTC steps in again for Polymarket will show whether that strategy can work at all.