New York Sues Polymarket, Seeks Triple Damages Over Sports Contracts

The state wants Polymarket's U.S. arm shut in New York, its gains forfeited and users repaid. Polymarket moved the case to federal court within hours and sued the state back.

Francis Gable

25/09/26 · 2 minSeptember 25, 2026 · 2 min read

New York Attorney General Letitia James and Gov. Kathy Hochul sued Polymarket's U.S. business on Sept. 24, asking a Manhattan court to shut it down in the state as an unlicensed gambling operation.

The state's lawsuit wants Polymarket to forfeit its illegal gains, repay users who were harmed and pay fines of three times those gains. It is New York's second such case in two months, after the state sued Kalshi and sought $36 billion in July.

Polymarket U.S. opened in December 2025 under oversight from the federal Commodity Futures Trading Commission. The case tests whether that federal approval lets it take sports bets in a state that licenses and taxes its sportsbooks.

New York Says the Contracts Are Bets

The lawsuit alleges Polymarket's contracts are gambling because users stake money on uncertain events they don't control. Polymarket does not have a license from the New York State Gaming Commission, so it pays none of the taxes licensed sportsbooks pay, the attorney general's office says.

The state says 18- to 20-year-olds can trade on Polymarket. New York sets the minimum age for mobile sports betting at 21.

According to multiple reports, it also seeks $100,000 for each offer or attempted offer of sports wagering in New York.

By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support.

James said that in announcing the suit.

Polymarket Takes the Fight to Federal Court

Polymarket moved the case from state court to federal court in Manhattan the same afternoon, CNBC reported. It also sued James and Gaming Commission officials, arguing Congress bars states from enforcing gambling laws against federally regulated exchanges.

"While the AG's decision to copy/paste a recycled lawsuit is disappointing, we'll fight for our users," said Neal Kumar, Polymarket's chief legal officer.

Missouri has also ordered Polymarket and five rivals to stop offering sports contracts.

The first question is which court hears New York's claims. They now sit before a federal judge in Manhattan beside Polymarket's own suit, and no hearing date has been reported.

Treat gambling as entertainment you pay for. 18+, and if it stops feeling like entertainment, help exists at BeGambleAware and GamCare.