New York, Polymarket Suing Each Other Over Illegal Sports Betting Issue
Mike Goodpaster Published 30/09/2026
Both the state of New York and the prediction market site Polymarket are suing each other over the issue of illegal sports betting. The original lawsuit was brought forth by New York Attorney General Letitia James in a state court in Manhattan. The suit alleges that Polymarket's sports-event contracts are sports betting and thus are circumventing New York State Gaming Commission regulatory approval to operate in the state.
Lawyers for Polymarket filed a countersuit. They allege that only the federal regulator of prediction markets, the Commodity Futures Trading Commission (CFTC) holds regulatory jurisdiction over prediction market sites such as Polymarket.
New York is making a familiar case against Polymarket
The New York lawsuit is covering familiar ground.
New York Governor Kathy Hochul and Attorney General Letitia James made a joint statement announcing the lawsuit against Polymarket. This legal action accuses Polymarket of running an illegal gambling operation in New York through its prediction market platform.
Polymarket launched in the United States in December 2025 as a service that allowed users to bet money on the outcome of sporting events, the release noted. An investigation by the Office of the Attorney General (OAG) 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.
The lawsuit is seeking a court order stopping Polymarket from operating as an unlicensed gambling business. If successful, the result will be requiring the company to pay fines, forfeit all illegal gains, and pay restitution to users.
“By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law," Hochul's statement said. "They have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.
"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.”
Polymarket says New York is putting the company in an impossible position
The Polymarket countersuit argues that New York is basically placing the company in a no-win situation with its lawsuit.
According to reporting by Reuters, Polymarket's lawyers allege that New York is threatening the company with irreparable harm. The New York lawsuit is leaving Polymarket with an "impossible choice." They can choose to obey state regulators. In doing so, though, Polymarket would be undermining its federal right to operate nationwide. By continuing operations, they will be facing potentially "huge" criminal liability.
"This is an extraordinary assertion of state power squarely foreclosed by federal law," Polymarket said in its lawsuit in Manhattan federal court. Polymarket's Chief Legal Officer Neal Kumar said the company sought to work out its differences with state officials, but "they preferred the media hit."
Polymarket is the latest prediction market site to be bit in the Big Apple
New York has previously filed similar suits against prediction market sites Kalshi, Coinbase, and Gemini Titan.
“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs," James said in a statement. "By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support.
"My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”