Polymarket has sued Gov. Kathy Hochul and Attorney General Letitia James in Manhattan federal court, hours after New York accused the prediction-market operator of running an unlicensed gambling business. The company also sought to move the state’s case from Manhattan state court to the Southern District of New York.
The federal action seeks a declaration that the Commodity Exchange Act preempts New York’s civil and criminal gambling laws as applied to Polymarket’s event contracts. Polymarket argues that the Commodity Futures Trading Commission has exclusive authority over the products, which it describes as federally regulated derivatives, and says state enforcement would cause imminent and irreparable harm.
Polymarket’s complaint calls New York’s position “an extraordinary assertion of state power squarely foreclosed by federal law.” It says the platform is a centralised exchange that matches third-party orders, with contracts priced through supply and demand, rather than a sportsbook that sets odds and takes the other side of wagers. The company says it charges a flat transaction fee and does not profit when a customer loses.
As we reported on Sept. 24, the state seeks to permanently bar Polymarket from offering gambling in New York without a Gaming Commission licence. New York’s case names QCX LLC, doing business as Polymarket US, and contends that its contracts meet the state definition of gambling because users risk money on uncertain outcomes outside their control or determined by chance.
The attorney general’s office said its investigation found that the platform operated without the required licence, avoiding taxes paid by licensed casinos and mobile sports-gambling operators. It alleges Polymarket allowed people aged 18 to 20 to access the platform, although New York’s minimum age for mobile sports betting is 21. The state seeks restitution and forfeiture, fines equal to three times alleged gains, and $100,000 for every offer or attempted offer of sports or mobile sports wagering.
James has described prediction markets as “quintessentially gambling,” while Hochul said the company had operated without a licence and put New Yorkers at risk. Polymarket’s chief legal officer, Neal Kumar, characterised the state’s arguments as recycled from actions against other prediction-market operators and said the company would fight for its users. Polymarket says it has more than 350 employees in New York and had been engaging with state officials before the litigation.
The case joins a wider conflict over whether sports-related event contracts fall under federal commodities regulation or state gambling law. On April 6, a divided Third Circuit held that Kalshi’s sports-related contracts were swaps governed exclusively by the CFTC and that the Commodity Exchange Act preempted New Jersey gambling law in that case. Judge Jane R. Roth dissented, arguing that the contracts were gambling and that state authority should remain intact.
Courts have reached conflicting conclusions on the federal-preemption question, and prediction-market participants have brought comparable suits against 11 states. The CFTC has separately maintained that Congress assigned it exclusive jurisdiction over event contracts traded on designated contract markets.
