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New York Expands Legal Actions With Lawsuit Against Polymarket

Legal Writer

Publish Date: Sep 25, 2026

Fact checked by: Matt Moreno

Key Points

New York Attorney General Letitia James has sued Polymarket for allegedly violating the state's gambling laws
Action resembles state's ongoing lawsuit against Kalshi on similar grounds
Litigation seeking to block New York's enforcement actions is still in progress as well

New York Attorney General Letitia James has announced a civil lawsuit against Polymarket over its offering of event contract trading to people in the state. It's the second instance of James following through on earlier cease-and-desist orders related to the activity.

The action, like its predecessor against Kalshi, seeks an order from the New York Supreme Court that could restrict most of Polymarket's activity in the state. A separate legal matter might short-circuit this endeavor for James, though.

James announces new lawsuit targeting Polymarket

A Thursday press release from James' office explains the rationale for the complaint. The main contention is that Polymarket is "running an illegal gambling operation in New York through its prediction market platform."

The complaint makes eight requests of the New York Supreme Court. The most important of those include an order enjoining Polymarket from offering most types of event contracts to people in New York and civil fines.

Polymarket has not filed an official response with the New York Supreme Court in this case as of the time of this writing. Its first filing in this matter may actually come in a federal court instead.

Breanna Stewart #30 of the New York Liberty looks on during the game against the Golden State Valkyries during a WNBA game on May 29, 2025 at Barclays Center Arena in Brooklyn, New York.

(Photo by Catalina Fragoso /NBAE via Getty Images)

Polymarket may follow Kalshi's lead in removal petition

When James sued Kalshi in state court in August, Kalshi's response was to petition the United States District Court for the Southern District of New York (SDNY) to remove the case there. The court granted that request.

Polymarket may make a similar move. The potential benefit is that state attorneys general are typically more familiar with state judges. Additionally, state judges tend to lend more respect to state attorneys general.

Those factors are usually not as pronounced in federal courts. Regardless of the venue where this dispute proceeds, another lawsuit in progress at the SDNY could have a significant impact.

CFTC lawsuit could derail James' enforcement actions

The US Commodity Futures Trading Commission (CFTC) sued New York in April over what it argued were the state's illegal attempts to usurp federal laws governing prediction market exchanges. In that complaint, the CFTC asked the SDNY for an order enjoining James from taking the very actions that these lawsuits against Kalshi and Polymarket represent.

New York scored a preliminary win in August in that case. However, the court has yet to rule on the issues of the case. That means forthcoming decisions could still halt James' lawsuits against Kalshi and Polymarket.

There are other implications for these ongoing legal matters in New York as well.

Ramifications for parties in New York City

New York City authorities have opened an investigation into whether Kalshi, Polymarket, and other exchanges have violated any city ordinances with their advertising practices. Meanwhile, the New York Yankees have signed Polymarket as a sponsor.

An injunction barring state authorities from enforcing gambling laws against exchanges likely would not impede New York City's investigation. The inquiry concerns consumer protection ordinances, not gambling regulations.

However, successful litigation for James against Polymarket could affect the Yankees' relationship with the exchange. A state court declaring its products illegal in New York might nullify the sponsorship contract.

The scrutiny on Polymarket's activities now matches that focusing on Kalshi's business in New York. Courts will decide the futures of both companies in the state.

Looking for more news and updates? Head over to our Ballislife Play page.

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