New York Sues Polymarket, Alleging Illegal Gambling

New York has taken Polymarket to court. State Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit in state court against QCX LLC, the company behind Polymarket's US business, claiming the crypto-based prediction market is an unlicensed gambling operation.

The case New York is making

The state's argument rests on a simple idea: if users put money on an outcome that nobody can know in advance, that is a bet. Under New York law, the complaint says, such contracts count as wagers, and anyone offering them needs a gambling licence. New York says Polymarket operates without one.

The lawsuit also raises the question of age. According to the complaint, Polymarket allows 18- to 20-year-olds to trade on its platform. New York, by contrast, sets a minimum age of 21 for mobile sports betting.

The state is asking the court for:

• an order barring Polymarket from operating in New York without a licence;
• disgorgement of what it calls illegal gains;
• restitution for customers; and
• penalties equal to three times those gains.

A wider fight over who regulates prediction markets

Polymarket opened its US platform in December 2025. Along with rival Kalshi, it takes the position that prediction markets are derivatives exchanges overseen at the federal level by the CFTC, not gambling sites answerable to individual states.

A number of states disagree, especially when it comes to contracts tied to sports. New York has already pursued Kalshi, filing suit in July and seeking penalties of up to $36 billion. In a separate dispute, Kalshi's case against New Jersey has gone all the way to the US Supreme Court, putting the federal-versus-state question before the country's highest court.

Is Polymarket legal in India?

India has no regulatory framework for prediction markets. Putting money on uncertain outcomes online is, at best, a legal grey area here, and real-money online gaming faces tight restrictions. If platforms holding a federal licence in the US are still fighting over their legal status at home, Indian users have even less protection when they use them from abroad.

For Indian investors, the practical takeaway is caution. Offshore prediction platforms sit outside Indian regulation, and if a dispute arises or funds are frozen, there is little recourse. Anyone funding such accounts with crypto should also remember that India's VDA tax rules still apply to the crypto itself.

FAQ

Why is New York suing Polymarket?

New York claims Polymarket's US arm is running a gambling business without a licence and lets users aged 18-20 place bets, even though the state's limit is 21+.

Is Polymarket regulated?

Its US platform operates as a CFTC-regulated venue, but New York and some other states argue that its contracts are gambling under state law.

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