New York Attorney General Letitia James has sued prediction market platform Polymarket US, alleging that it operates an unlicensed gambling business. State authorities are seeking to stop the company from operating in New York without the required licenses.
The lawsuit, announced on September 24, targets QCX LLC, the company behind Polymarket’s US operation. The attorney general is seeking fines, the forfeiture of allegedly unlawful gains, and restitution for affected users.
New York Classifies Prediction Contracts as Gambling
The attorney general’s office argues that Polymarket’s contracts fall within the definition of gambling under state law. According to the lawsuit, users wager money on events whose outcomes are beyond their control.
New York authorities say these activities require a license from the New York State Gaming Commission. They also allege that the company has avoided taxes paid by licensed gambling businesses.
Age restrictions are another focus of the case. The attorney general’s office says Polymarket allows users aged 18–20 to participate, while New York requires mobile sports betting users to be at least 21.
The state is also asking the court to impose fines equivalent to three times the company’s gains from its allegedly unlawful activities. These requests do not constitute a final court ruling; filing the lawsuit does not automatically ban the platform.
Polymarket Says It Is Staying in New York
Polymarket Chief Legal Officer Neal Kumar said the company would maintain its presence in New York following the lawsuit. Kumar said the company had been working with authorities to address their concerns.
Kumar noted that Polymarket was founded in a small New York City apartment and now employs more than 350 people in the city. His statement signaled that the company does not intend to leave its home state.
New York’s action forms part of a broader regulatory dispute over prediction markets. The state filed a lawsuit against Kalshi in July over similar allegations.
At the center of the dispute is whether these platforms should primarily fall under state gambling laws or federal financial market regulations. The latest lawsuit brings that disagreement back into focus through Polymarket’s US operations.
Polymarket US Differs From the International Platform
Although Polymarket is widely known in the crypto market, there are important differences between its US business and international platform. The international platform uses blockchain infrastructure and crypto assets, while Polymarket US operates through a more centralized structure and traditional dollar payments.
Polymarket US describes itself as a designated contract market regulated by the US Commodity Futures Trading Commission (CFTC). The lawsuit therefore focuses on the US business’s position under state law, despite its shared branding with the international platform.
The international platform’s connection to crypto extends beyond offering predictions about Bitcoin or Ethereum. Its infrastructure on Polygon allows positions tied to event outcomes to be represented as tokens.
Users can buy “yes” or “no” shares on an event. Shares corresponding to the correct outcome become redeemable for one dollar when the market resolves, while losing shares become worthless; users can also sell their positions before the outcome is determined.
This distinction also matters when assessing the lawsuit’s implications for the crypto sector. New York’s request does not include a blanket ban on Polygon or the platform’s international blockchain infrastructure; the announced legal action concerns the services Polymarket US offers within the state.
The case could help shape which licenses and user eligibility requirements apply to prediction markets operating in the United States. For now, the central developments are the state’s request to halt operations and Polymarket’s statement that it intends to remain in New York.
