When it comes to prediction markets, New York Attorney General Letitia James has taken a consistent position and stuck to it. Coinbase and Gemini came first, followed by Kalshi. Now, New York has added Polymarket to its legal campaign against prediction-market platforms.
London's trading industry is coming home!
The state is seeking to stop QCX LLC, the operator of Polymarket US, from offering contracts on sports, elections, culture and other events without the licences required by the New York State Gaming Commission.
No court ruling has been issued, and the requested restrictions are not yet in force.
New York Targets More Than Sports Markets
Polymarket US opened to selected users in December 2025 and became available to all US iPhone users in May.
The 33-page petition filed by the New York Attorney General alleges that the platform has offered state residents contracts covering professional and college sports, political elections and entertainment.
Investigators used New York accounts to purchase contracts tied to a Mets game and the elimination of a contestant from Big Brother. They also identified a market on the winner of the New York gubernatorial election.
The filing says another account placed more than five bets totalling over $5,000 in one day. New York cites this activity in support of separate alleged violations of state penal law covering the operation of a gambling business and the possession of gambling records.
Gambling Classification Would Trigger Further Violations
If the court accepts New York’s argument that Polymarket operates as a gambling platform, the company could face additional violations.
It allows customers aged 18 to open accounts and offers contracts involving New York college teams, while licensed sportsbooks may accept sports wagers only from customers aged 21 or older and cannot offer bets on those teams.
The requested remedies extend beyond stopping the platform’s operations in the state. New York wants Polymarket US to identify its customers and provide an accounting of their bets and losses, as well as the revenue generated from the alleged violations.
The state is also seeking restitution, disgorgement and a penalty equal to three times the company’s alleged gains. For sports contracts, it has requested an additional $100,000 for each offer or attempted offer of unauthorised wagering.
Federal Courts Split over State Authority
The Polymarket action continues New York’s broader campaign against prediction-market platforms. The attorney general sued Coinbase and Gemini in April and brought a separate case against Kalshi in July, alleging that their event contracts constitute gambling offered without state licences.
QCX is registered with the CFTC as a designated contract market. Its federal status places the case within the wider dispute over whether CFTC-regulated exchanges remain subject to state gambling laws.
Prediction-market operators argue that the Commodity Exchange Act gives the CFTC exclusive jurisdiction, while states maintain that federal designation does not prevent them from regulating contracts they consider wagering.
Federal appeals courts have reached opposing conclusions. The Third Circuit sided with Kalshi in its dispute with New Jersey, while the Ninth Circuit allowed Nevada to enforce its gambling laws against the platform.
The split has left the boundary between federal derivatives regulation and state gambling authority unresolved.
Polymarket Has Yet to Respond
The New York petition does not address QCX’s DCM status, the CFTC or federal pre-emption. It describes the contracts as wagers and relies on the state constitution, penal and racing laws, as well as the federal Wire Act.
In a statement reported by the Associated Press, Polymarket Chief Legal Officer Neal Kumar said the company would “fight for our users.” Polymarket has not yet filed its response, leaving the scope of any injunction and the company’s potential financial liability unresolved.
This article was written by Tanya Chepkova at www.financemagnates.com.
Source: Finance Magnates
