Polymarket Countersues New York Over Gambling Allegations — SkimNews
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- New York Attorney General Letitia James sued Polymarket U.S. on Thursday, alleging the prediction market platform operates an illegal gambling operation in violation of state laws.
- Polymarket countersued James and the New York State Gaming Commission in U.S. District Court for the Southern District of New York the same day, arguing states lack power to regulate event contracts that fall under federal derivatives oversight.
- Polymarket's federal suit calls characterizing federally regulated event-contract trading as 'unregulated gambling' an 'erroneous theory' and contends 'Congress has expressly prohibited' state enforcement against CFTC-regulated swaps.
- New York's lawsuit seeks penalties of three times Polymarket's gains plus $100,000 for each attempt or offer of sports wagering in the state, along with full accountings of all platform trades, user losses and company earnings.
- Governor Kathy Hochul said Polymarket's 'unlicensed gambling operation' puts New Yorkers at risk, 'especially those underage who are most vulnerable to problem gaming,' while James said the company is 'targeting the most vulnerable and depriving New York families.'
- Polymarket, whose U.S. platform debuted in December 2025 under CFTC regulation and which employs more than 350 people in New York, called the state's case a 'copy/paste recycled lawsuit' and pledged to fight for its users.
- The New York action follows a similar civil suit the state filed against Kalshi nearly two months earlier, part of an escalating national feud in which the CFTC has itself sued several states asserting federal authority over prediction markets.
Why it matters: Polymarket is moving the fight to federal court to test whether state gambling statutes can reach CFTC-regulated event contracts — a jurisdictional question with stakes well beyond one company, since Kalshi faces a parallel New York suit and the CFTC has already sued states to defend its turf. New York is seeking treble damages and $100,000 per alleged wagering offer, raising the financial cost of operating prediction markets in the state.
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