New York Governor Kathy Hochul and Attorney General Letitia James filed a $4.6 billion lawsuit against Polymarket US on Thursday. The suit, filed in state court, accuses the CFTC-regulated prediction market platform of offering unauthorized sports wagering and underage illegal gambling to residents and visitors located in the state.
“Calling it a ‘prediction market’ doesn’t change the facts,” said Gov. Hochul in a social media post on Thursday morning. “If you’re taking bets in New York, our gambling laws apply. Today, [New York Attorney General Letitia James] and I sued Polymarket for running an illegal gambling operation and preying on vulnerable New Yorkers.”
The state’s legal action against Polymarket US comes less than two months after New York filed a $36B lawsuit against Kalshi, in which it likewise claims that the prediction market is offering underage gambling and unauthorized sports wagering within the state’s borders. Although the state is technically seeking roughly $31.4 billion less from Polymarket, the requested disgorgement amount is still equal to triple the exchange’s alleged illegal earnings derived from New York account holders.
In an interview with CNBC on Thursday, New York Attorney General Letitia James said, “By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support.”
Just hours after New York filed its lawsuit, Polymarket US countersued AG Letitia James and the state’s gaming officials in Manhattan federal court. The prediction market also petitioned to have the $4.6 billion New York lawsuit moved to federal court.
Polymarket’s domestic US exchange, QCX LLC, is formally regulated by the Commodity Futures Trading Commission (CFTC). Recent lawsuits brought by states and tribes against federally regulated prediction exchanges challenge the agency’s claim that it has “exclusive jurisdiction” over sports contracts that make up the majority of trading activity on platforms like Polymarket and Kalshi.
Contrary to legal claims made by states and tribes, prediction markets and the CFTC argue that sports contracts are immune from jurisdictional gambling laws due to their categorization as financial derivatives that are traded rather than wagered on.
New York’s legal claims revolve around sports contracts. According to the state, markets related to sports outcomes that are currently available to New Yorkers who are 18 or older are:
New York’s sports betting laws are clear in that all users must be at least 21 years of age to participate. Online sports bets placed within the state are hosted by sportsbook apps including FanDuel and DraftKings, which are obliged to pay a 51% tax rate on revenue.
The state’s lawsuits against Kalshi and Polymarket US are currently active and pending. Kalshi’s attempt to block New York from enforcing its gambling laws against the exchange was rejected in District Court, which has prompted the company to appeal to the Second Circuit.
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