In September 2025, two months after New York officials initiated legal action against Kalshi, they turned their attention to Polymarket, bringing a lawsuit to state court aimed at halting the operations of the New York City-based company from providing sports prediction markets in New York.
On the same day, Polymarket countered by filing its own lawsuit in federal court. Governor Kathy Hochul and Attorney General Letitia James stated on September 24 that James had filed a suit against Polymarket’s U.S. entity, QCX, alleging that the company has been engaging in an unlawful gambling operation within the state since December 2025, offering sports betting to users below the 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," Governor Hochul declared. She further emphasized her commitment, alongside Attorney General James, to protect New Yorkers by putting an end to what they characterize as an illegal operation.
The lawsuit from New York highlights concerns about the exposure of youth to gambling and notes that prediction market companies registered with the Commodity Futures Trading Commission (CFTC) do not make contributions to the state economy or pay gaming taxes. Additionally, the lawsuit criticizes Polymarket for including games featuring in-state college teams, which is prohibited under New York's gambling laws.
New York’s court filing requests several actions from Polymarket, including:
– A permanent cessation of its operations or marketing within the state.
– The provision of detailed records of customer transactions with restitution for users.
– Payment of damages, a fine equal to three times its financial gain from violations, and penalties of $100,000 for each instance of offering or attempting 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 Attorney General James. "My office will never hesitate to take action to defend our laws and keep New Yorkers safe."
In response, Polymarket's Chief Legal Officer, Neal Kumar, criticized the state's actions as a "media hit," and defended the company's roots in New York, stating, "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. We believe in New York and we’re staying here.
While we find it disappointing that the AG’s decision closely resembles previous lawsuits without much originality, we will continue to fight for our users. We did not preemptively sue the state but opted to engage with them directly. They chose to pursue this route. Our door is open for discussions about how we protect consumers and provide fair, transparent, and legal markets."
On Thursday evening, Polymarket filed a lawsuit against Attorney General James and other officials in federal court in Manhattan, seeking to block New York's efforts to close down its prediction market offering in its home state. The company denounced the state's move as an outrageous exercise of authority forbidden by federal law.
The overlapping lawsuits exacerbate the complex landscape of prediction market litigation within the largest sports betting market in the country. Kumar's comment on the lawsuit’s similarity to that filed against Kalshi reflects ongoing judicial and regulatory tensions involving prediction markets.
The lawsuit against Kalshi, initiated by New York at the end of July, sought a total of $36 billion. This action followed a federal court's denial of Kalshi’s injunction request pending an appeal involving a cease-and-desist order issued by the New York State Gaming Commission in October 2025. In a twist, the CFTC instructed Kalshi to continue its operation in New York just 11 days after New York brought its lawsuit against the company.
The CFTC also filed a separate lawsuit against New York in April, shortly after the Attorney General sued Coinbase and Gemini for supposedly operating illegal gambling platforms.
Amidst this legal turmoil, prediction markets in New York continue to gain visibility through high-profile partnerships. Polymarket announced a collaboration with the NHL’s New York Rangers and Madison Square Garden in January, while Kalshi teamed up with Madison Square Garden in May. In July, Novig established a partnership with the New York Mets, and Polymarket struck a deal with the New York Yankees in August, which included branding opportunities at Yankee Stadium. Yankees Senior Vice President of Partnerships, Michael Tusiani, expressed the organization’s enthusiasm for developing Polymarket’s brand presence.
Polymarket has also formed national partnerships with leagues that feature New York teams, including the NHL, MLB, and Major League Soccer.
