New York sues Polymarket over alleged unlicensed gambling operations
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New York has filed a lawsuit against Polymarket’s US operation, seeking to stop it operating as an unlicensed gambling business in the state. The action escalates New York’s campaign against prediction markets, which officials argue enable unlawful betting and may allow underage users to participate.
The case is the state’s fourth against a prediction-market business, following actions involving Kalshi, Coinbase Financial Markets and Gemini Titan. The dispute also concerns whether states or the federal Commodity Futures Trading Commission should regulate these platforms, with US appeals courts issuing conflicting rulings. Polymarket says it will remain in New York, defend its users and engage with the state over consumer protections and market legality.
- New York sued Polymarket over alleged unlicensed gambling.
- The state is pursuing cases against four prediction-market businesses.
- US courts remain divided over regulatory authority.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
States have a legitimate regulatory interest in protecting their residents from harmful gambling-like activities within their borders, particularly when these platforms allow 18-year-olds to participate whilst most state sports betting laws set the minimum at 21. Traditional principles of state police power recognise that states should oversee gaming and betting activities to safeguard consumers and prevent underage participation in speculative financial instruments that carry genuine risks of substantial loss. Prediction markets, whatever their technical classification, function as wagering platforms and warrant the same protective regulatory oversight that states extend to casinos and sports betting.
The case against
Prediction markets are properly classified as commodity futures contracts under the Commodity Exchange Act, placing them squarely within the federal CFTC's regulatory mandate rather than state gambling jurisdiction. A uniform federal framework provides clearer oversight, prevents regulatory arbitrage whereby platforms migrate to permissive states, and avoids the chaos of incompatible state regimes that would effectively prohibit the platforms from operating nationally. The CFTC possesses specialised expertise in derivatives regulation, whilst state-by-state governance based on gambling principles would misclassify these financial instruments and create an unworkable patchwork of conflicting mandates.
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Originally published by Engadget as “New York continues to fight prediction markets with a lawsuit against Polymarket”.