New York Sues Polymarket Over Gambling Laws As Prediction Market Hits Back

Michael Hassall Published 28/09/2026

The New York Attorney General, the chief lawyer and law enforcement officer of the State of New York has filed legal proceedings against prediction market giant Polymarket alleging it is an unlicensed gambling company.

First reported by Reuters earlier today (Monday, Sep. 28), Polymarket immediately launched a countersuit challenging the lawsuit’s claim that they constitute a gambling company, and kicking off a legal battle that could have huge implications for the prediction market industry.

Polymarket and New York state enter legal battle over gambling law classification

The lawsuit reportedly states that Polymarket is operating without a New York state gambling licence and that it is targeting users under 21. Gambling is legal in the state of New York for those 18 or older, but under 21s are unable to engage in gambling activities at tribal and commercial casinos.

Polymarket is under fire as the NY Attorney General begins legal proceedings. Image Credit: Polymarket

Attorney General Letitia James’ latest lawsuit expands her existing efforts to bring prediction markets under the laws and licences provisioned for gambling companies. Previously in 2026 the state had pursued similar suits against Kalshi, Coinbase Financial Markets, and Gemini Titan.

The case seeks civil fines, forfeiture of illegal gains, and full restitution to customers. In a statement, the state’s governor, Kathy Hochul, said Polymarket had knowingly violated state law and put residents at risk, particularly underage users.

“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.” – Kathy Hochul, NY Governor

The Attorney General has previously stated that she views prediction markets as gambling, with Polymarket instead insisting it is not.

In their countersuit, the company has fallen short of openly disagreeing the Attorney General’s claims, instead arguing that the state has put it in an “impossible” situation. According to Polymarket they are being forced to choose between complying with state regulations, which would undermine their federal, national, and indeed, global ability to operate, or operate in contrary to the state’s claims, and face criminal liability.

Earlier in 2026, both Polymarket and Kalshi had attempted to curry favor in the state with a widespread PR campaign. This included free grocery stores offered across New York City. This charm offensive has seemingly failed, with an earlier legal probe now growing into this full blown lawsuit.

Whatever the outcome, this could be a landmark case in the prediction market industry.

Featured Image credit: New York Attorney General

Michael Hassall

About Michael Hassall

Michael is a eight-year veteran of the games writing space, but has being playing them for as long as he can remember. With bylines across the internet, he’s used his expertise to cover esports, prediction markets, mainstream gaming, streamers, and more besides.

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