New York Attorney General Letitia James has sued prediction market Polymarket, accusing the company of operating an illegal gambling business while promoting sports betting across all 50 states.
The case adds Polymarket to an increasingly complex dispute between state authorities and federal regulators over who has the power to oversee prediction markets in the United States.
Polymarket allows users to stake money on the outcome of future events. New York says some of those contracts amount to gambling and that the company has been operating without the required licence.
“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” James said in a statement.
“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support. My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”
The state’s lawsuit focuses in part on Polymarket’s marketing before it launched its US prediction market on 3 December 2025. The company compared its service with sportsbooks and promoted the platform with the claim that users could “TRADE EVERY FOOTBALL GAME IN ALL 50 STATES”.
Polymarket later advertised the service as being “legal in all 50 states”, according to the filing. New York disputes that position.
The examples cited in the case include markets on whether the New York Mets would beat the Atlanta Braves, who would finish second on Big Brother, and which candidates would win gubernatorial elections.
New York therefore argues that the platform covered outcomes ranging from baseball and reality television to politics, rather than operating solely as a financial market.
“Each contract is a bet,” the filing states. “Respondent accepts wagers from members of the public as a gambling business in New York in flagrant disregard of New York’s State Constitution, penal laws, and other statutes.”
The attorney general’s office also identifies users aged 18 to 21 as particularly vulnerable to the alleged gambling operation.
Polymarket is not the only prediction market facing legal action from James. She sued rival Kalshi nearly two months ago, after filing similar petitions against Coinbase Financial Markets and Gemini Titan in April.
The dispute reflects a broader clash with the Commodity Futures Trading Commission (CFTC), which claims exclusive federal authority over prediction markets. That position conflicts with states seeking to regulate the products under their gambling laws.
Federal appeals courts are already divided over which authorities have jurisdiction, according to Reuters. The disagreement could eventually lead to a case before the US Supreme Court.
Prediction markets, which began as platforms for wagering on uncertain events, have gained momentum since the 2024 presidential election. They are now at the centre of a wider battle over who should set the rules for the industry.
