- New York AG Letitia James and Governor Kathy Hochul announced a lawsuit against QCX LLC d/b/a Polymarket US (Polymarket) for allegedly running an illegal gambling operation in New York through its prediction market platform. The AG asserts that an investigation found that Polymarket’s prediction market is an illegal, unlicensed gambling operation that exposes New Yorkers to serious personal and financial risk and is accessible to those under the legal gambling age of 21.
- The lawsuit alleges that Polymarket’s prediction markets meet the legal definition of gambling because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance. It further asserts that Polymarket is available to users between 18 and 20 even though New York law requires a person to be at least 21 years old to participate in mobile sports betting. As such, AG James is seeking a court order stopping Polymarket from operating as an unlicensed gambling business in New York state and requiring the company to forfeit illegal gains, distribute restitution to consumers who were harmed, and pay fines equal to three times the gains the company made through its illegal actions.
- This is just the latest in the war by AGs against prediction market operators around the country. For example, the U.S. Court of Appeals for the Sixth Circuit is the latest appellate court to weigh in on an AG action when it ruled in favor of Tennessee (and for Ohio in a parallel case), and rejected Kalshi’s claim that federal commodities law exempts its sports bets from state laws, holding that even if Kalshi’s contracts did count as federal financial products, state sports betting laws would still apply. This decision lifts an order that previously blocked the State from enforcing those laws against the company.