New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit on Thursday against QCX LLC, the corporate entity doing business as Polymarket US, alleging the platform operates an illegal, unlicensed gambling business in the state. The legal complaint requests that the court halt the company's unauthorized operations, compel the forfeiture of all illegal gains, order restitution for affected users, and levy financial penalties equal to three times those gains.
Allegations of Illegal Gaming and Underage Access
State officials assert that Polymarket US—which expanded into the United States in December 2025—violates New York law by enabling individuals to place monetary bets on sports events and other unpredictable outcomes outside a bettor's control. According to the lawsuit, QCX LLC failed to secure a required license from the New York State Gaming Commission and did not pay taxes mandated for authorized operators. The filing further charges that Polymarket permits users between 18 and 20 years of age to trade, breaking New York's statutory requirement that mobile sports bettors be at least 21 years old.
Attorney General James stated that state laws exist to protect residents, prevent problem gambling, and secure funding for public benefit programs. Governor Hochul added that the platform knowingly endangered state residents, particularly underage traders. Responding to the lawsuit, Polymarket Chief Legal Officer Neal Kumar told the Associated Press, "We'll fight for our users," adding that the firm grew from a small New York City apartment into a business employing over 350 local workers and intends to maintain its operations.
Expanding State Battles Over Prediction Markets
The action follows a similar complaint filed by New York state against Kalshi in Manhattan state court in July, as well as lawsuits brought by James in April against Coinbase and Gemini over prediction products. Beyond New York, the city of Baltimore filed a lawsuit against both Kalshi and Polymarket on August 13, claiming the platforms misled the public about their legal standing. These state-level challenges contrast with ongoing disputes regarding state oversight, such as recent legal rulings on state gambling laws and Kalshi.
Prediction market operators maintain that individual states lack regulatory authority because their instruments fall under the federal jurisdiction of the Commodity Futures Trading Commission (CFTC). Kalshi has consistently asserted that its contracts represent federally regulated derivatives rather than state-regulated gambling, a position supported by the CFTC's opposition to state gaming authority over federal derivatives markets.
Key Takeaways
- Target Entity: Lawsuit names QCX LLC (Polymarket US), which launched U.S. operations in December 2025.
- Demanded Penalties: Demands an operational halt, full asset forfeiture, user restitution, and triple fines.
- Age Limits: Accuses the platform of enabling 18 to 20-year-olds to trade, violating New York's 21-year-old minimum requirement.
- Precedent Cases: Builds on New York's prior filings against Kalshi in July and Coinbase and Gemini in April, plus Baltimore's August 13 suit.
Why It Matters
This lawsuit intensifies the high-stakes battle between state-level gaming regulators and federal oversight mechanisms for digital prediction markets. If state courts determine that federal derivative platforms must comply with local sports betting licenses and age limits, prediction exchanges will face fragmented compliance requirements across different U.S. jurisdictions. The resolution of this case will help establish whether prediction platforms can operate under a single federal framework or must alter their models state by state.
