New York has picked its second target among prediction markets in just two months. After suing Kalshi in July, Attorney General Letitia James and Governor Kathy Hochul announced on September 24 a lawsuit against Polymarket, the platform where users trade bets on real-world outcomes ranging from elections to sports.
The claim is straightforward: state officials say Polymarket has spent years taking money from New Yorkers without a gambling license, sidestepping the state's gaming laws. The suit demands the company stop operating and advertising in New York, register with the state Gaming Commission, forfeit its illicit profits, and pay a $100,000 fine. Hochul singled out the risk to minors, arguing teenagers can too easily access a platform that functions, in practice, like a sportsbook.
On paper, Polymarket operates legally in the US — it secured approval from the federal CFTC this spring and returned to the American market after a long absence. That's exactly where the conflict lies: what looks like a derivatives exchange to federal regulators still reads as gambling under a different name to individual states. Massachusetts and Rhode Island have pursued similar claims, and Kentucky already sued both Kalshi and Polymarket together earlier this year.
Polymarket's chief legal officer, Neal Kumar, said the company is "staying" in New York and has been working with state officials to address their concerns. That framing sits awkwardly next to a lawsuit that portrays the company as knowingly dodging local rules for profit.
With the CFTC defending platforms' right to operate federally while individual states keep filing suits one after another, prediction markets are caught in limbo — a green light in Washington carries no weight at the state level, and it's now up to the courts to sort out which authority wins.
