New York on Thursday sued Polymarket, accusing the company of running an illegal gambling operation that skirts industry regulations in the latest challenge to prediction markets.
The lawsuit brought by Attorney General Letitia James comes nearly two months after she launched a similar case against prediction market Kalshi. The complaints allege the markets – which allow users to bet on everything from sports and pop culture to political events – are simply attempts to avoid the regulations and taxes associated for licensed gambling platforms.
“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.
“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support,” she added.
When the AG initially targeted Kalshi without suing Polymarket back in July, the move raised eyebrows. James’ office did not immediately respond to The Post’s request for comment on the order of her suits.
Like Kalshi, Polymarket rejected the allegations.
“While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users,” the company’s chief legal officer Neal Kumar said in a Thursday statement, adding that James opted for “a media hit” instead of engaging with Polymarket directly.
“Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here … We believe in New York and we’re staying here.”
A representative for Polymarket told The Post that the company has had several conversations with James’ office.
Critics have argued that Kalshi and Polymarket provide young adults between 18 and 21 – too young to legally gamble on sportsbooks – an alternative way to bet on games, leaving them vulnerable to gambling addictions.
A group of 44 state attorneys general, dozens of Native tribes and the casino industry have been fighting in court to have the industry regulated by state gambling commissions, not the Commodity Futures Trading Commission.
James is asking the court to force Polymarket to forfeit illegal gains and fork over fines equal to three times the profits it reaped through its actions.
She is also seeking restitutions for failing to register with the New York State Gaming Commission, thereby skipping out on tax payments that are used to fund public schools, sports programs for underserved youth and problem gambling treatment.
The suit is backed by New York Gov. Kathy Hochul, who called Polymarket a “bad corporate actor.”
It and Kalshi have seen a meteoric rise in popularity since launching in the US in December 2025 and July 2021, respectively. Kalshi controls an estimated 90% of the US market for prediction platforms and Polymarket is the second-largest platform in the space.
But the companies have also faced blowback for their vulnerabilities to insider trading, allowing government employees and people with privileged business information to rake in thousands from their bets on futures contracts.
In August, Kalshi slapped scandal-ridden former Rep. George Santos with its first-ever lifetime ban fror allegedly making more than $17,000 in illicit profits by betting on his own attendance at the State of the Union.
And this spring, federal prosecutors charged an Army officer for making $400,000 by trading on Polymarket on classified information involving the military operation to capture Venezuelan dictator Nicolás Maduro.
Both platforms have announced policies to prevent insider trading.
Concerns have also been mounting about the threat to teens and young adults.
Young adults between 18 and 21 have traded $5.4 billion on Kalshi in the first eight months of the year, according to a CNN analysis. A whopping $3.9 billion of those trades were on sports and parlays.
A survey by Common Sense Media found that a third of 11-, 12- and 13-year-olds were already gambling, and by the age of 17, 50% said they had gambled in the past year.
Kalshi has responded that it has implemented safeguards, including deposit limits and warnings sent to users with patterns of risky behavior. It announced a $2 million donation to the National Council for Problem Gambling earlier this year.
Polymarket has a data-sharing partnership with Dow Jones, which is owned by The Post’s parent company News Corp. Kalshi has a deal with Fox Corp, which also shares common ownership with News Corp.