New York State has filed a lawsuit against prediction market company Polymarket, alleging it violated state laws against illegal gambling.
The suit, filed on Thursday by New York State Attorney General Letitia James, follows a similar lawsuit filed two months prior against competitor Kalshi. The state also sued Coinbase and Gemini for offering users the ability to bet on "sports, entertainment, and elections, in violation of New York laws."
The state accused all the companies of operating without licenses from the State Gaming Commission.
"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 announcing the suit. "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 suit also alleges that the company encouraged gambling among young people, accusing Polymarket of targeting users as young as 18, while state law requires users to be at least 21 years old to participate in mobile sports betting.
"By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming," New York Governor Kathy Hochul said in a statement.
The lawsuit claims that Polymarket, valued at over $20 billion, has advertised sports betting since July 2025. It cited an August 17, 2025, post on X about the launch of its US mobile app that stated it was "BAD NEWS (For sportsbooks)".
Prediction markets allow users to wager on event contracts covering political events, sports, elections, and award shows. Concerns about prediction markets intensified earlier this year when wagers were made shortly before the United States and Israel struck Iran, drawing widespread criticism in Washington.
Polymarket has contested the allegations.
"We chose to engage with them directly on the substance and address their concerns," said chief legal officer Neal Kumar in a statement. "They preferred the media hit. Any time the [attorney general’s] office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets."
Kalshi is facing similar allegations in New York State and has criticized reports that equate it to a sports betting or gambling platform.
Polymarket did not respond to Al Jazeera's request for comment.
This lawsuit follows recent reporting from the Wall Street Journal alleging that a significant number of users linked stolen bank debit cards to make wagers, draining their accounts. According to the report, CEO Shayne Coplan responded to the issue by stating, "Just keep growing and pay a fine if regulators ever find out."
New York State's lawsuit is part of a broader trend of states suing prediction market platforms, including Arizona, Massachusetts, and Nevada. These states are in disagreement with the federal government, as the Commodity Futures Trading Commission asserts its authority over the regulation of prediction markets.
Polymarket has connections to the family of US President Donald Trump. The platform has received investment from 1789 Capital, a venture capital firm backed by Donald Trump Jr., the president's eldest son, who also sits on the company's advisory board.
