New York seeks to shut down Polymarket over gambling claims
Regulation & Gov ·
New York's top officials have filed suit against Polymarket, arguing the platform runs an unlicensed betting operation that breaks state gambling law.
Attorney General Letitia James and Governor Kathy Hochul announced the action against QCX LLC, the entity behind Polymarket US, contending that its wagering markets fit New York's definition of gambling because participants stake money on outcomes they cannot control, as detailed in the Decrypt report. The complaint follows a state probe that concluded the platform functions without proper authorization, exposing residents—including some below the legal betting age of 21—to potential financial and personal harm, according to CryptoPotato.
Officials are asking a court to remove Polymarket's ability to operate within the state, require it to hand back any profits earned there, compensate affected users, and pay penalties equal to triple its New York earnings. James framed the case as a matter of fairness, saying the company avoided obligations that fund public and educational programs by not following the same rules as licensed operators, while Hochul pointed to risks facing younger users drawn into the platform's markets.
The move builds on a broader push by James and Hochul against the prediction-market sector, following a July suit against Kalshi that sought $36 billion in damages under similar gambling allegations, and April actions targeting Coinbase and Gemini over comparable offerings. Other states, including Kentucky and Illinois, have opened their own inquiries into the industry, signaling a widening patchwork of regulatory friction, according to The Block.
Polymarket and similar platforms have countered that they operate under federal oversight through the Commodity Futures Trading Commission rather than state gambling statutes, a jurisdictional dispute that the current federal administration has publicly supported on the industry's side. The clash comes as prediction markets have grown rapidly, with projections from Bernstein cited in the coverage suggesting trading volume could reach $1 trillion by 2030 and generate close to $10.8 billion in revenue.
Coverage of the filing has spread across at least seven outlets, underscoring how closely the sector is being watched, per WuBlockchain. Still unresolved is how courts will weigh the federal-versus-state jurisdiction argument, whether Polymarket will contest the New York suit directly, and what precedent the outcome might set for the parallel Kalshi litigation and other pending state actions.