New York Sues Polymarket Over Illegal Betting; Firm Countersues State
New York alleges Polymarket ran unlicensed sports wagering; the firm fired back with its own suit as US prediction-market fights multiply.
This article was produced with AI assistance and edited by the ON360 newsroom.
New York has sued Polymarket, alleging the prediction-market platform ran an unlicensed sports-betting operation in the state. Polymarket responded within days by suing New York back, escalating a legal fight that already engulfs rival platform Kalshi.
According to Gambling Insider, the state’s complaint accuses Polymarket of offering event contracts that amount to illegal gambling without a New York gaming licence. The suit follows a nearly identical action New York filed against Kalshi in July.
What New York wants
New York is seeking an injunction, restitution, disgorgement of profits and penalties of up to $100,000 for each unauthorized offer of sports wagering. State lawyers also allege Polymarket lets users aged 18 to 20 trade on its markets, below the state’s minimum age of 21 for mobile sports betting.
Polymarket moved the case from state court to the Southern District of New York. The company argues federal jurisdiction applies because the state’s claims touch the Wire Act and because the dispute raises questions about the Commodity Exchange Act and the Commodity Futures Trading Commission’s authority over its contracts.
That defence has already stumbled once in the same courthouse. In July, U.S. District Judge Analisa Torres rejected Kalshi’s bid for a preliminary injunction, finding the company had not shown federal law preempts New York’s gambling statutes as applied to sports contracts. Kalshi has appealed.
New York has separately sued Coinbase and Gemini over similar allegations, while the CFTC has sued the state directly.
Tribal geofencing and other flashpoints
Kalshi has reportedly geofenced land belonging to three California tribes amid separate litigation. Analyst Mick Bransfield posted on X that Kalshi attorney Grant Mainland told a court the company had implemented the blocks, though a lawyer for the tribes said the move does not resolve their claim of irreparable harm.
The hearing came a week after the Ninth Circuit found the tribes are likely to succeed in arguing Kalshi’s sports contracts amount to Class III gaming under the Indian Gaming Regulatory Act when entered into on tribal land, reversing a lower court’s dismissal.
Separately, the Indiana Gaming Commission rejected an NCAA request to ban college player prop bets at licensed sportsbooks, joining Missouri regulators who declined a similar ask earlier this year citing thin market data. Ohio, Louisiana, Maryland and Vermont have restricted the bets, while proposed bans stalled in New York, New Jersey and Massachusetts.
All 11 Democrats on the Senate Banking Committee have asked Chair Tim Scott for a public hearing on prediction markets, after a Republican-only roundtable with Kalshi CEO Tarek Mansour. In a September 23 letter, the senators said contracts tied to corporate performance “could meet the definition of security-based swaps” and raised concerns about manipulation and consumer losses.
Why it matters north of the border
Ontario’s regulated market operates under a different framework. The AGCO licenses operators and iGaming Ontario runs the conduct-and-management side, leaving no ambiguity over whether an event-contract exchange needs provincial sign-off.
The US disputes still matter here. Prediction-market operators are courting Canadian users, and how American courts sort out federal versus state authority over these products could shape whatever comes next for the category in Canada. Licensed Ontario operators are required to offer deposit limits and self-exclusion tools for anyone concerned about their play.
Related: US Court Backs Tribes Against Kalshi as Senate Sinks Crypto Market Bill
Related: Missouri AG Moves to Halt Kalshi, Polymarket as Montana Pauses Its Fight
Related: Louisiana Tribe Launches First Kalshi-Powered Prediction Market Amid Legal Fights
Related: CFTC Warns “Mention Markets” Face Manipulation Risk as Kalshi Fights Multiply