New York has sued Polymarket over its event contracts, alleging the company runs an illegal gambling business without a state gaming license, and Polymarket answered by pulling the case into federal court and separately suing New York’s gaming officials.
The filing extends a fight the state opened against rival platform Kalshi earlier this year, and it sets up another test of whether state gambling law or federal commodities regulation governs prediction markets.
The Polymarket interface showing a prediction market for a Stranger Things episode release.New York’s Demands, Polymarket’s Federal Pivot
New York is seeking an injunction, restitution, disgorgement and penalties that include $100,000 for each alleged unauthorized offer or attempted offer of sports wagering. The state also alleges Polymarket lets users as young as 18 trade on its platform, even though New York requires mobile sports bettors to be at least 21.
Polymarket removed the case from state court to the Southern District of New York, arguing federal jurisdiction applies because New York’s complaint raises a Wire Act claim alongside questions about the Commodity Exchange Act and the Commodity Futures Trading Commission’s authority over event contracts, as covered in Polymarket’s federal lawsuit and New York’s gambling-law challenge. The company separately sued New York gaming officials directly, seeking a declaration and injunction to block state gambling-law enforcement against what it describes as a federally regulated exchange, arguing the CEA gives the CFTC exclusive jurisdiction over its contracts.
Daniel Patrick Moynihan United States Courthouse in New York CityThose are Polymarket’s claims, not a court’s findings – and the argument has already run into resistance in the same district.
A Fight New York Started Months Ago
The Polymarket suit follows New York’s earlier case against Kalshi, part of New York’s broader legal action against prediction-market operators. In July, U.S. District Judge Analisa Torres denied Kalshi’s request for a preliminary injunction, finding the company had not shown that New York’s gambling laws are preempted by the Commodity Exchange Act as applied to its sports event contracts. Kalshi has appealed.
New York has also sued Coinbase and Gemini over similar allegations, while the CFTC has separately sued the state – meaning the Polymarket case lands atop an already tangled set of parallel suits testing the same jurisdictional question from different angles.
Polymarket’s chief legal officer, Neal Kumar, said in comments reported by Reuters that the company tried to resolve its differences with state officials directly but that they opted for a public confrontation instead. New York framed the case around consumer protection, with the state’s suit describing Polymarket’s conduct as exposing residents to gambling risk without the safeguards a licensed operator would carry, according to Reuters.
What’s Unresolved
Polymarket’s removed case now sits before the Southern District of New York, while its separate suit against state gaming officials pushes the same core question from the opposite direction: whether the CEA strips New York of authority to police these contracts at all. Neither question has been decided.
The case arrives amid wider federal scrutiny of the sector – the CFTC has flagged manipulation risks in so-called mention markets, and Senate Banking Committee Democrats have pushed for a public hearing on prediction markets more broadly. None of that resolves the immediate jurisdictional standoff, which now runs through at least two active New York dockets and Kalshi’s pending appeal.
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