New York state officials have filed a lawsuit against prediction market Polymarket, alleging it operates an unlicensed gambling business and exposes underage users to financial risk.
Key facts
- •New York officials filed the lawsuit in a New York County court.
- •The state alleges Polymarket operates as an unlicensed gambling business while avoiding required tax payments.
- •The lawsuit highlights concerns over underage access, as Polymarket allows users as young as 18 to participate.
- •The CFTC claims it has exclusive jurisdiction over prediction markets and has intervened in similar state-level cases.
- •Polymarket's Chief Legal Officer Neal Kumar stated the company will fight the lawsuit and maintains its commitment to operating in New York.
New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit against Polymarket, accusing the platform of running an illegal gambling operation. The state is seeking a court order to halt the company's operations in New York, while demanding the forfeiture of illegal gains, payment of fines, and restitution for users.
State Allegations and Concerns
State officials argue that Polymarket bypasses regulations required for licensed casinos and sports betting platforms, thereby depriving the state of tax revenue intended for public schools and gambling treatment programs. Furthermore, the lawsuit claims the platform permits users between 18 and 20 years old to participate, violating New York's minimum age requirement of 21 for mobile sports betting.
Regulatory Conflict and Industry Response
The lawsuit is part of a broader effort by New York to regulate prediction markets, with similar legal actions previously initiated against Kalshi, Coinbase Financial Markets, and Gemini Titan. This state-level push faces opposition from the U.S. Commodity Futures Trading Commission (CFTC), which asserts it holds exclusive jurisdiction over these platforms. Courts remain divided on the issue, with conflicting rulings from the 3rd and 9th U.S. Circuit Courts of Appeals regarding state regulatory authority. Polymarket Chief Legal Officer Neal Kumar criticized the lawsuit as a "recycled" action and stated the company intends to fight the allegations. He noted that the company remains committed to its New York presence and expressed a willingness to engage in direct discussions with the Attorney General's office.
Timeline
- AprilNew York sued Coinbase Financial Markets and Gemini Titan.
- JulyNew York launched a lawsuit against Kalshi.
- AugustThe CFTC declared a market emergency in New York regarding Kalshi.
- Last monthThe 9th Circuit Court of Appeals ruled in favor of Nevada's ability to regulate Kalshi.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Ars Technica, Engadget.
