New York Sues Polymarket, Calling It an Illegal Gambling Business

New York is taking legal action against Polymarket, a popular online platform where people can bet on the outcomes of future events, from sports games to elections.

On Thursday, New York Attorney General Letitia James (the state's top legal official) filed a lawsuit claiming that Polymarket is really running an illegal gambling operation — just under a fancier name.

What is a 'prediction market'? A prediction market is a website where people buy and sell 'event contracts' — basically bets on whether something will happen. For example, you might buy a contract that pays out if a certain team wins a game. If you're right, you make money; if you're wrong, you lose it. New York argues this is essentially gambling.

According to the lawsuit, the problem centers on:

• Sports betting contracts offered through Polymarket's mobile app, launched in December 2025
• Advertising aimed directly at New York residents
• A possible request to block the platform entirely for people living in New York

State officials say the company is trying to dodge New York's strict gambling rules by calling its bets "event contracts" instead of what they really are — wagers.

This isn't the first time. New York has already gone after similar companies:

• Kalshi (another prediction market) was sued in July
• Coinbase and Gemini (crypto exchanges) faced legal action in April over similar services

A bigger fight over who's in charge There's a tug-of-war between state and federal authorities. The Commodity Futures Trading Commission (CFTC) — a US federal agency that oversees certain financial contracts — claims it has "exclusive jurisdiction" (sole authority) over these platforms, not the states.

New Jersey has even asked the US Supreme Court (the highest court in the country) to settle the question of who should regulate prediction markets. The court hasn't yet decided if it will take up the case.

Bottom line: New York believes prediction markets like Polymarket are gambling in disguise, while these companies argue they're legitimate financial platforms overseen by federal regulators. The outcome could shape the future of this fast-growing industry.

This is an AI-generated summary. Read the original article at: https://cointelegraph.com/news/new-york-polymarket-illegal-gambling-operation-lawsuit?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound