New York vs Polymarket: Why is a prediction platform facing legal action and what did it say? Explained | Today’s news

New York Attorney General Letitia James filed a lawsuit against Polymarket on Thursday, stepping up her efforts to challenge prediction market platforms that she says violate state laws banning illegal gambling, Reuters reported. Polymarket pushed back against New York state officials’ decision to take legal action.

James filed the request in state court in Manhattan following a similar lawsuit against rival Kalshi two months ago. Five months earlier, it also took action against the operators of prediction markets Coinbase Financial Markets and Gemini Titan.

The companies were accused of offering prediction market services without licenses required by the New York State Gaming Commission. James’ office also argued that the platforms could encourage problem gambling, particularly among people under the age of 21, and pose risks to users’ financial, emotional and physical well-being.

New York authorities are seeking civil penalties, disgorgement of profits allegedly obtained from the illegal activity and full compensation for affected customers.

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Prediction markets typically allow users to place bets through “event contracts” tied to the outcome of sporting events. These markets also offer contracts linked to political developments and cultural events, including the Oscars.

New York authorities said Polymarket’s business is reportedly valued at more than $20 billion.

James described prediction markets as “essentially gambling”, arguing that they allow users to bet on outcomes beyond their control in exchange for potential payouts.

The petition filed Thursday cited several recent markets offered on Polymarket, including a bet on whether the Los Angeles Dodgers will beat the New York Mets by more than 1.5 runs on July 24, 2026. The Dodgers won the game 4-2.

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The state also raised concerns about Polymarket allowing users between the ages of 18 and 20 to access its platform, even though New York law sets the minimum age for mobile sports betting at 21.

James said Polymarket’s operation of gambling markets without state oversight “exposes New Yorkers to gambling addiction with few, if any, safeguards,” the petition states.

What did the governor of New York say?

“By operating an unlicensed gambling game, Polymarket did more than knowingly violate state law, it put New Yorkers at risk, especially minors, who are most at risk for problem gambling,” New York Governor Kathy Hochul said in a statement.

Polymarket responds to the lawsuit

Polymarket’s head of legal affairs, Neal Kumar, said the company tried to address New York officials’ concerns directly, but said they chose to address the matter publicly instead.

Chief Legal Officer Neal Kumar said in a statement: “We decided to deal with them directly on the substance and address their concerns,” adding: “They preferred a media hit. Whenever the (attorney general) office wants to move, we have the door open to a conversation about how we protect consumers and offer fair, transparent and legal markets.”

Read also | Polymarket, Kalshi Face Spanish Ban

Meanwhile, the action against Polymarket represents the latest move by US states to tighten oversight of prediction markets, an industry that has surged in popularity after beating traditional pollsters in predicting Republican Donald Trump’s victory over Democrat Kamala Harris in the 2024 presidential election.

The state-level effort has also put officials at odds with the Trump administration, as the Commodity Futures Trading Commission (CFTC) claims it has sole authority over regulation of prediction markets.

Federal appeals courts reached different conclusions about which authorities should regulate the sector, potentially setting the stage for the US Supreme Court to resolve the dispute.

The return of Polymarket in the US and investments associated with Trump Jr

Founded in 2020, Polymarket describes itself as “the world’s largest predictive marketplace.”

The platform remained out of the US market for more than three years before returning to the scene in December after receiving approval from the Commodity Futures Trading Commission (CFTC) three months earlier.

Last year, Polymarket also secured an investment from 1789 Capital, a venture capital firm backed by President Donald Trump’s eldest son, Donald Trump Jr. Trump Jr. serves as a partner of the company and is also an advisor to Polymarket.

(With agency input)