New York Sues Polymarket, Alleging Illegal Sports Betting in the State

• New York Attorney General Letitia James and Gov. Kathy Hochul (D) today announced a lawsuit against Polymarket
• The lawsuit alleges Polymarket’s sports event contracts are illegal, unlicensed sports betting in the state
• Polymarket said it plans to fight the lawsuit

New York Attorney General Letitia James and Gov. Kathy Hochul (D) today announced New York levied a lawsuit against Polymarket, alleging the prediction market company is running an illegal gambling operation in the Empire State.

The lawsuit alleges Polymarket’s sports event contract market is an illegal, unlicensed gambling operation in the state, allowing individuals under the legal gambling age of 21 to participate. The litigation seeks a court order stopping Polymarket from operating in New York and requests the company pay a fine equal to three times the gains it made through its sports event markets.

“I will always stand up for New Yorkers when bad corporate actors prey on consumers and threaten tax dollars that fund schools and critical public services,” Governor Hochul said in a press release. “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. Nobody is above the law in our state, and working with Attorney General James, we are fighting to protect New Yorkers and put this illegal operation to an end.”

Polymarket Plans to Fight Lawsuit

The lawsuit, filed in New York County Supreme Court, alleges Polymarket’s existing sports event contracts meet the legal definition of gambling as the outcomes of the events in which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.

“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” Attorney General James said in a press release. “By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support. My office will never hesitate to take action to defend our laws and keep New Yorkers safe.”

The lawsuits requests Polymarket be completely prohibited from offering its sports event contracts in New York without a sports betting license, make full restitution to customers who have engaged in sports event contracts on its platforms, disgorge all amounts obtained in connects with the sports event contracts in the state, pay a penalty of three times the amount of its gains in New York, and pay a penalty of $100,000 for each offering or attempt to offer sports wagering or online sports wagering within New York.

Neal Kumar, chief legal officer of Polymarket, told Sports Betting Dime the company will fight the lawsuit.

“Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. We believe in New York and we’re staying here. While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users. We didn’t run to preemptively sue the state — we chose to engage with them directly on the substance and address their concerns. They preferred the media hit. Any time the AG’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,” he said.

Similar Lawsuit to One Levied Against Kalshi

New York similarly filed a lawsuit against Kalshi this past July. The lawsuit seeks $36 billion from the company for alleged illegal gambling in the state

The state filed its initial lawsuit against Kalshi in New York County Supreme Court. However, the lawsuit was removed to New York federal court after a Kalshi request and has been assigned to U.S. District Court for the Southern District of New York Judge Analisa Torres. Torres denied Kalshi’s initial request for a preliminary injunction in early July.

In the state’s lawsuit, New York is seeking at least $36 billion from the prediction market operator, directing the respondent to pay a penalty of $100,000 for each offer or attempt to offer sports betting or online sports betting in the state without authorization. The suit requires the company to pay the fine, forfeit all gains from its gambling operations in the state, and pay restitution to users.

As a company, Kalshi has a total valuation of $22 billion.

The lawsuit claims Kalshi is offering an illegal gambling operation in the state, as well as providing online sports betting to residents under the age of 21. Event contracts are available for those 18 and over in most states.