New York vs Polymarket: Why is the prediction platform facing legal action and what did it say? Explained

New York Attorney General Letitia James filed a lawsuit against Polymarket on Thursday, intensifying her efforts to challenge prediction-market platforms that she alleges violate the state’s laws prohibiting illegal gambling, according to Reuters. Polymarket pushed back against New York state officials’ decision to pursue legal action.James submitted the petition in a Manhattan state court, following a similar legal action against rival Kalshi two months ago.

Five months earlier, she had also taken action against prediction-market operators Coinbase Financial Markets and Gemini Titan.The companies have been accused of offering prediction-market services without the licences required by the New York State Gaming Commission. James’ office also alleged that the platforms could fuel problem gambling, particularly among people under 21, and pose risks to users’ financial, emotional and physical well-being.New York authorities are seeking civil penalties, the surrender of profits allegedly earned through illegal activity and full compensation for affected customers.Prediction markets typically allow users to place bets through “event contracts” tied to the outcomes of sporting events.

These markets also offer contracts linked to political developments and cultural occasions, including the Oscars.New York authorities said Polymarket’s business is reportedly valued at more than $20 billion.James described prediction markets as "quintessentially gambling", arguing that they enable users to place wagers on outcomes beyond their control in exchange for potential payouts.The petition filed on Thursday cited multiple recent markets offered on Polymarket, including a wager on whether the Los Angeles Dodgers would beat the New York Mets by more than 1.5 runs on July 24, 2026.

The Dodgers won the game 4-2. The state also raised concerns over Polymarket allowing users aged 18 to 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 supervision is "exposing New Yorkers to gambling addiction with few, if any, safeguards," according to the petition. What did New York Governor say?

“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. Polymarket responds to lawsuit Polymarket Chief Legal Officer Neal Kumar said the company had sought to address New York officials’ concerns directly but claimed they instead chose to pursue the matter publicly,

Chief Legal Officer Neal Kumar said in a statement, "We chose to engage with them directly on the substance and address their concerns," adding, “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.” Meanwhile, the action against Polymarket marks the latest move by US states to tighten oversight of prediction markets, an industry that has surged in popularity after outperforming traditional pollsters in forecasting Republican Donald Trump’s victory over Democrat Kamala Harris in the 2024 presidential election.

The state-level efforts have also put officials at odds with the Trump administration, as the Commodity Futures Trading Commission (CFTC) maintains that it has sole authority over the regulation of prediction markets. Federal appeals courts have reached differing conclusions over which authorities should regulate the sector, potentially setting the stage for the US Supreme Court to resolve the dispute. Polymarket’s US return and Trump Jr.-linked investment

Polymarket, established in 2020, describes itself as “the world's largest prediction market”. The platform stayed out of the US market for over three years before making a comeback 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 at the firm and is also an adviser to Polymarket. (With inputs from agency)