New York State sues Polymarket for allegedly running an illegal gambling operation

New York Attorney General Letitia James on Thursday filed a lawsuit against Polymarket, the prediction marketplace that launched sports betting-related contracts in violation of New York state gambling laws. This follows July's Kalshi suit and April's Coinbase vs. Gemini lawsuits, which highlighted another enforcement action by New York State over the forecasting market industry as well as conflicts between federal and state regulators over jurisdiction in this emerging field.

Accusation core: The truth behind the bribery contract

The lawsuit focuses on the mobile app Polymarket, which was launched in December 2025. New York state officials noted in their complaint that the application offered contracts for sports events to residents of New York State and its advertising practices were also included in the indictment.

The lawsuit alleges that Polymarket essentially provides gambling services in the form of bribery predicting market turmoil by contracting events to circumvent New York State's strict regulation of gambling business and its legal and financial consequences. According to the indictment, state officials are also entitled to seek measures to prevent the platform from providing services to residents of New York.

Conflicts over federal and state jurisdiction

The case against Polymarket is the latest example of state-level regulators vying with federal agencies over prediction market regulation. Michael Selig, chairman of the Commodity Futures Trading Commission (CFTC), has previously claimed that the federal agency has exclusive jurisdiction over forecasting market firms. If this assertion holds true, states' efforts to enforce gambling laws on prediction platforms will face legal challenges.

New Jersey appeals to the Supreme Court

Disagreements over jurisdiction have prompted some state governments to take the dispute to the highest levels of the judicial system. Earlier this month, New Jersey officials filed a petition with the United States Supreme Court requesting that the court hear the state's case against Kalshi in hopes of obtaining a ruling that could clarify the predictive market industry's regulatory affiliation.

What it means for the industry and users

Platforms such as Polymarket have previously operated under the United States federal futures regulatory framework, and now states like New York and New Jersey are taking legal action one after another, meaning that the risk of dual regulation facing the industry is increasing. If New York wins the case and blocks the platform, it will directly affect access rights for users in the state; and whether or not the Supreme Court takes over the New Jersey vs Kalshi case may decide future forecasting market The direction of the industry at United States , whether it is dominated by the federation or the states, this ruling deserves continued attention.

In addition, the New York City Council has previously announced an investigation into predatory marketing practices in forecasting markets, showing that local scrutiny of the industry is extending from regulatory enforcement to marketing compliance.