New York sues Polymarket US as illegal gambling business
New York Attorney General Letitia James and Governor Kathy Hochul sued Polymarket US on Thursday, alleging the prediction market platform operates an illegal gambling business in the state and seeking a court order to block its operations. The lawsuit claims Polymarket runs without a state gambling license. Sources describe the suit as a significant state-level enforcement action against a CFTC-registered exchange. The filing comes two months after the state brought similar claims against Kalshi.
New York's suit against Polymarket fractures the federal preemption shield that CFTC-registered platforms have relied on to operate nationwide. Connecticut drew first blood against Kalshi's shield; now Polymarket must fight on a second state front while the Supreme Court weighs petitions from New Jersey, Crypto.com, and Robinhood seeking a single federal answer.
Each new state filing compounds legal spend faster than any case resolves, and emboldens the next attorney general to file copycat suits. Kalshi and Polymarket face identical exposure because the same preemption logic underpins their offerings. A loss in New York would give other states a ready-made playbook, forcing platforms into costly geofences that fragment liquidity and leave traders holding positions whose legality shifts with state borders.