New York sues Polymarket, says it ran illegal gambling operation - Reuters

New York State authorities filed a lawsuit against the prediction platform Polymarket on Thursday, alleging that the company operates an illegal and unlicensed gambling business. The legal action, led by Attorney General Letitia James and Governor Kathy Hochul, seeks to halt the platform's operations within the state, impose financial penalties, and secure restitution for consumers.

The state’s complaint asserts that Polymarket meets the legal definition of gambling because its users stake money on uncertain outcomes, such as elections, weather, and sporting events, which are outside the control of the participants. Officials argue that by failing to obtain a license from the State Gaming Commission, the company has bypassed regulations intended to protect consumers and ensure funding for public services and educational programs.

A central component of the lawsuit involves allegations regarding the age of the platform's users. State officials claim that Polymarket targets individuals as young as 18, whereas New York law mandates a minimum age of 21 for participation in mobile sports betting. Governor Hochul characterized the company as a bad corporate actor, stating that the operation puts vulnerable populations, particularly those underage, at risk of problem gaming.

Polymarket maintains that its platform functions as a prediction market rather than a gambling operation. In response to similar regulatory challenges, firms in this sector have frequently argued that state-level oversight is preempted by federal jurisdiction. These companies contend that primary regulatory authority over their activities falls under the purview of the U.S. Commodity Futures Trading Commission.

This lawsuit is the latest in a series of enforcement actions taken by New York against digital trading and wagering platforms. The state has previously initiated similar legal proceedings against other prominent companies, including Kalshi, Coinbase, and Gemini, citing violations of state gambling laws.

The outcome of the current litigation remains pending in state court. Through this action, the Attorney General’s office aims to enforce state licensing requirements and address concerns regarding the potential societal harms associated with unlicensed wagering applications.