New York Sues Polymarket, Seeks Triple Fines on Alleged Illegal Gambling Gains

New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit against Polymarket on Thursday, accusing the crypto-based prediction market of running an unlicensed gambling operation in the state. Four independent outlets, CoinDesk, Bitcoin Magazine, Decrypt and CryptoPotato, reported the filing the same day, agreeing on the core allegation: Polymarket never obtained a license from the New York State Gaming Commission.

The suit names QCX LLC, doing business as Polymarket US, according to CryptoPotato’s reporting. That entity launched in the United States in December 2025, letting users stake money on sports results and other uncertain events. Two outlets, Bitcoin Magazine and CryptoPotato, independently note that the complaint flags users aged 18 to 20 trading on the platform, while New York law sets 21 as the minimum age for mobile sports betting.

What the Complaint Actually Asks For

James wants a court order halting Polymarket’s unlicensed activity in New York. She is also asking the platform to forfeit its allegedly illegal gains and pay restitution to affected users. CryptoPotato’s account adds a figure not repeated elsewhere in the sample: fines set at three times those gains, a penalty structure common in gaming enforcement but not confirmed by the other three reports reviewed here.

The state’s underlying legal theory, shared across the reports, is straightforward. New York defines gambling as staking money on outcomes the bettor cannot control and cannot predict with certainty. The AG’s office argues Polymarket’s markets fit that definition exactly, regardless of what the platform calls its products.

Tax Revenue and the Federal Counter-Argument

Bitcoin Magazine’s account, not fully echoed elsewhere, ties the licensing gap to lost tax revenue that would otherwise fund public schools, youth sports programs and problem-gambling treatment in New York. That framing sits alongside a broader jurisdictional fight documented across sources: Polymarket and rival Kalshi maintain they are federally regulated exchanges offering event contracts, a type of derivative overseen by the Commodity Futures Trading Commission, not state gaming boards.

The CFTC has taken the platforms’ side in that argument. Bitcoin Magazine reports the commission sued nine states in 2026, seeking exclusive nationwide authority over the prediction-market industry, a detail worth treating as single-sourced within this set of reports until further confirmation surfaces.

The Quotes, and Their Sourcing

CryptoPotato is the only outlet in this sample carrying direct quotes from the filing and the response. James said: “Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs.” Hochul, in the same account, said Polymarket knowingly violated state law and exposed underage users to particular risk.

Polymarket’s Chief Legal Officer, Neal Kumar, responded with a statement reported through the Associated Press and relayed by CryptoPotato: “We’ll fight for our users.” Kumar reportedly added that the company started in a small New York City apartment and now employs more than 350 people in the city, with plans to stay. That headcount figure has not been independently verified across the other three reports reviewed for this story.

What remains firmly cross-confirmed is the filing itself, its date, the two named officials, and the unlicensed-gambling allegation at its center. The penalty multiplier, the tax-funding rationale, the employee count and both direct quotes currently trace to a single outlet each within this sample, worth flagging for anyone building a timeline or an API feed off this story rather than a headline alone.

Read more: Kalshi’s $5,500 Order Cluster Hits $5B in ETH Perps; CFTC Claim Traces to One Source

Sources

• coindesk.com
• bitcoinmagazine.com
• decrypt.co
• cryptopotato.com