New York sued Polymarket US on September 24, alleging its event contracts violate state gambling law. Polymarket removed the case to federal court; no merits ruling has been issued.
New York Attorney General Letitia James sued Polymarket US on Sept. 24, alleging that its event contracts amount to unlicensed gambling under state law.
The civil enforcement petition targets QCX LLC, the federally regulated exchange doing business as Polymarket US, and asks a court to stop the challenged activity in New York.
The 33-page petition goes beyond sports. It cites contracts tied to elections and entertainment as well as games involving New York teams. The state seeks an injunction, restitution, disgorgement and civil penalties.
Polymarket removed the action from the New York County Supreme Court to the U.S. District Court for the Southern District of New York later that day, under federal case number 1:26-cv-08338. The change of forum does not decide whether the contracts violate state law.
The new case puts Polymarket US directly into a New York enforcement fight that already involves Kalshi, Coinbase and Gemini. DeFi Rate‘s legal tracker now lists the Polymarket petition as pending. No merits ruling or change to customer access has been verified in this case.
New York challenges more than sports contracts
The attorney general brought the action under New York Executive Law Section 63(12). The petition alleges that Polymarket US offered unauthorized wagering and advertised its contracts to New Yorkers. Among the examples it identifies are a New York Knicks game, the New York governor election and a television elimination contest. The state also alleges that people ages 18 to 20 can use the platform, while New York requires mobile sports wagering customers to be at least 21.
The requested relief includes a permanent injunction against unlicensed gambling activity in New York and an accounting of wagers and receipts. The petition asks for restitution and disgorgement, a penalty measured at three times alleged gains and a $100,000 penalty for each unauthorized sports-wagering offer or attempt. It does not state a single total damages figure.
Attorney Daniel Wallach posted the state petition and a supporting memorandum when the action surfaced.
Polymarket moves the case to federal court
Wallach later reported the same-day removal to the Southern District of New York and posted a federal civil cover sheet bearing the new case number. The petition still shows an unassigned state index and a notice that the county clerk had not yet reviewed it when the copy was generated. QCX LLC is Polymarket’s U.S. exchange, not the separate international venue.
New York had already sued three other exchanges
James brought separate petitions against Coinbase and Gemini in April, alleging that their event contracts ran afoul of state gambling law. In July, New York filed its own action against Kalshi. Those cases are separate proceedings with their own parties, requested remedies and procedural histories; the damages sought from Kalshi are not a figure in the Polymarket petition.
The Commodity Futures Trading Commission then ordered Kalshi to keep operating under its exchange obligations while New York sought to restrict its contracts. Prediction markets analyst Mick Bransfield shared the CFTC order concerning Kalshi’s earlier New York dispute.
In that parallel federal case, a judge denied an emergency request to block New York enforcement, but the underlying dispute continued. At a September hearing, the CFTC argued that federal law gives it exclusive oversight of contracts traded on registered exchanges. Neither development decided the newly filed Polymarket claims.
A New York partnership now faces a direct state challenge
In August, Polymarket announced a partnership with the New York Yankees while New York was litigating against other prediction-market operators. The state had not directly sued Polymarket at the time of that report.
The Sept. 24 petition changes that: New York is now challenging the company’s U.S. exchange in its own enforcement action.
The federal court will now handle the removed case unless its forum changes again. The state still must prove its allegations, and the court has not issued a merits ruling on the petition.
