New York Attorney General Letitia James has sued Polymarket as an illegal unlicensed gambling operation, seeking forfeiture and fines in a fight the company says it will take head-on.
ABC News reported that James filed the case on Thursday, accusing the prediction market of running gambling in New York without a license from the New York State Gaming Commission.
The suit asks a court to order forfeiture of money, restitution to users, and fines. James’s office cast the platform as a threat to New Yorkers, including people under the legal gambling age of 21.
Polymarket rejects that frame. Its chief legal officer says the filing is a recycled copy of an earlier case and vows to fight for the company’s users.
The complaint argues Polymarket’s markets meet New York’s legal definition of gambling. Outcomes are uncertain, outside the bettor’s control, or turn on chance, the filing says.
James also claims the firm sidestepped licensing and the tax obligations that licensed casinos and mobile sportsbooks face. State rules bar wagering on New York college teams and block sports betting for anyone under 21.
In a statement, James tied the case to familiar enforcement themes.
"Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,"
Gov. Kathy Hochul piled on the same day.
"By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming,"
The Washington Examiner noted the case sits inside a larger clash: states treating prediction markets as gambling, while the industry treats them as federally overseen financial products.
Polymarket chief legal officer Neal Kumar answered with a New York roots pitch and a direct jab at the attorney general’s method.
"Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. We believe in New York and we're staying here,"
Kumar did not soft-pedal the company’s view of the lawsuit.
"While the AG's decision to copy/paste a recycled lawsuit is disappointing, we'll fight for our users."
He left the door open for talks, saying the AG’s office is welcome anytime to discuss consumer protection and what the firm calls fair, transparent, and legal markets.
The company has long insisted its event contracts are federally regulated derivatives beyond the reach of state gaming laws. That dispute is no longer just a press statement.
Reuters reported that James sued in Manhattan state court while Polymarket filed its own case the same day in Manhattan federal court.
Polymarket wants a declaration that the Commodity Futures Trading Commission holds exclusive authority. The company argues state enforcement creates an impossible choice and risks enormous criminal liability. In its filing, Polymarket called James’s move “an extraordinary assertion of state power squarely foreclosed by federal law.”
The platform relaunched in the United States after a CFTC green light. It has investment ties to 1789 Capital, linked to Donald Trump Jr., and has been valued at more than $20 billion in recent reporting.
ABC News noted Polymarket’s U.S. launch came in December 2025, first on sports and later on current events and weather. One estimate put the firm on pace for more than $70 billion in trading in 2026, more than triple its 2025 volume. A global site registered in Panama is supposed to stay off-limits to U.S. users; the U.S. version offers fewer markets.
James’s Polymarket case mirrors the suit her office already brought against rival prediction market Kalshi. That pattern matters. It shows a strategy, not a one-off.
Breitbart reported New York is seeking triple-gains penalties, $100,000 for each sports wagering offer, and a full accounting of trades, user losses, and company earnings.
James framed the stakes in blunt terms in that coverage: by skirting New York law, she said, Polymarket is “targeting the most vulnerable and depriving New York families of critical services and support.”
If the state wins, reporting says Polymarket could face billions in payments and pressure to change how it operates nationwide. Multiple lawsuits across the country already claim platforms like Polymarket and Kalshi fall under state jurisdiction. Federal courts, in related fights, have backed CFTC oversight over state gambling rules.
Kumar’s headcount claim is straightforward: more than 350 employees in New York, born from a small city apartment. That is the kind of private growth politicians usually celebrate when the company is quieter and the headlines are softer.
James and Hochul instead rolled out the problem-gambling script and the under-21 warning. The suit treats prediction markets like an unlicensed book. Polymarket treats them like regulated event contracts with a federal referee.
Those two theories cannot both fully govern the same product. One path runs through the New York State Gaming Commission and state tax schemes. The other runs through the CFTC and federal preemption. The dueling Manhattan filings put that conflict on a clock.
James has now aimed the same template at two major prediction markets. Polymarket says it will not fold. The company is hiring in New York, trading at massive volume, and asking a federal judge to keep Albany out of a market Washington already touched.
When state AGs stretch gambling statutes over federally watched contracts, innovators get the bill and users get the uncertainty, accountability should cut both ways.