New York AG targets Polymarket in latest crackdown on prediction markets
New York's attorney general and governor have sued Polymarket, alleging the prediction market operates as an unlicensed gambling business. The state has also pursued similar actions against Kalshi, Coinbase Financial Markets, and Gemini Titan. The CFTC has intervened, arguing it has sole regulatory authority, and courts have split on the issue.
The lawsuit marks the fourth such action by New York against prediction market operators, following similar complaints filed against Kalshi in July and against Coinbase Financial Markets and Gemini Titan in April. The state's legal theory treats these platforms as unlicensed gambling operations, with particular concern over underage participation since some platforms permit users as young as 18 while many states set sports betting minimums at 21.
Federal and state authorities are locked in a jurisdictional dispute. The CFTC maintains it holds exclusive oversight authority, while states argue their consumer protection powers extend to these platforms. Appellate courts have reached conflicting conclusions, with the 3rd Circuit backing the CFTC in a New Jersey case while the 9th Circuit recently allowed Nevada's regulation of Kalshi to proceed.
The outcome of these cases could reshape how Americans access prediction markets, which have grown into a significant venue for wagering on elections and current events. If states prevail, operators may face fragmented compliance requirements or withdraw from certain markets, potentially limiting consumer choice. Conversely, if the CFTC's authority is upheld, a unified federal framework could emerge, though questions about consumer protections and age verification would remain unresolved. Users, operators, and regulators all have meaningful stakes in how these jurisdictional questions are settled.