New York sues Polymarket, seeking court order to shut down operations

New York state filed a lawsuit against prediction market platform Polymarket, arguing the company operates as an unlicensed gambling business in violation of state law. Governor Kathy Hochul said the platform has put New Yorkers at risk, particularly young people who are especially vulnerable to problem gambling.

State officials argue that Polymarket avoids paying taxes that licensed casinos and mobile sports betting operators are required to pay. That tax revenue normally supports public schools, youth sports programs for underserved communities, and gambling addiction education and treatment services.

A particular concern raised by the state is that Polymarket remains accessible to users aged 18 to 20, even though New York law sets the minimum age for mobile sports betting at 21. Officials warned this exposes younger users to gambling's harmful effects on mental health and finances.

New York Attorney General Letitia James said the state's gambling laws exist to protect residents and ensure funding for public benefit programs, and that by circumventing these rules, Polymarket is targeting the most vulnerable people and depriving families of essential support.

The state is asking the court to issue an order halting Polymarket's operations as an unlicensed gambling business, along with fines, forfeiture of illegally obtained profits, and restitution to affected users. The lawsuit was filed in a New York County court.

This is not the state's first action against the prediction market industry — New York previously sued Polymarket's main rival, Kalshi. The case sets up a direct conflict with the federal government, as the Commodity Futures Trading Commission under the Trump administration claims exclusive authority to regulate these platforms. In August, the CFTC declared a market emergency in New York in an attempt to block the state from applying its gambling laws to Kalshi.