New York Sues Polymarket US Over Alleged Illegal Gambling Operation

New York Governor Kathy Hochul and Attorney General Letitia James announced on September 24, 2026, that the state is suing QCX LLC, which does business as Polymarket US, accusing the prediction-market operator of running an illegal, unlicensed gambling operation in New York. The state’s verified petition was brought under Executive Law § 63(12) in New York Supreme Court in New York County and is dated September 24; it was received on the state’s NYSCEF electronic filing system that day, and the filed copy bears a legend noting it had not yet been reviewed and approved by the County Clerk and that its index number was unassigned.

The petition asks the court to permanently enjoin Polymarket US from operating a gambling business in New York without a license from the New York State Gaming Commission, and to bar the company and its principals, agents and employees from violating the state constitution and the gambling statutes it cites. It also seeks an accounting of all bets placed, customer losses and the company’s gains; restitution, disgorgement and damages; a penalty of three times the respondent’s gain under Penal Law § 80.10; a $100,000 penalty for each unauthorized offer of sports wagering under Racing Law § 1367(16)(a); and $2,000 in costs.

What the petition alleges

QCX LLC is a Delaware limited liability company with its principal place of business in New York, New York, and the petition alleges it is not licensed with the Gaming Commission in any capacity. According to the filing, the Polymarket U.S. mobile app launched for select U.S. users on or around December 3, 2025, with “sports—followed by markets on everything,” was reportedly made available to all U.S. iPhone users on or around May 12, 2026, and was accessible through the Polymarket.US website by August 27, 2026, at the latest. The petition says the company advertised on its Apple App Store page that it is “legal in all 50 states.” It alleges the platform offered contracts on events including whether the New York Knicks would defeat the San Antonio Spurs in the NBA finals, the “New York Governor Election Winner,” and which contestant would be eliminated in week four of “Big Brother Season 28,” along with spread wagers and parlay-style “combos.” It describes the business, together with its parent and affiliates, as reportedly valued at more than $20 billion, with reported annualized revenue well over $1 billion since the U.S. platform launched.

The petition also alleges the platform permits bettors aged 18 to 20, even though New York’s Racing Law defines minors as anyone under 21 and requires licensed mobile sports wagering operators to prohibit minors from participating. It further alleges Polymarket offered wagering on events involving New York college teams — including Syracuse and St. John’s basketball and a Buffalo-Albany football game — a category the Racing Law treats as a “prohibited sports event” that even licensed operators may not offer. On the bookmaking counts, the filing states that on August 27, 2026, a bettor in New York placed more than five bets totaling more than $5,000, exclusive of fees, that the company accepted — conduct the petition ties to first-degree promoting gambling under Penal Law § 225.10 and possession of gambling records under § 225.20.

In total, the petition brings eight causes of action, each framed as repeated and persistent illegality under Executive Law § 63(12): violations of New York Constitution Article I, Section 9; Penal Law §§ 225.05, 225.10 and 225.20; Racing Law §§ 1367(16)(a), 1367-a(2)(a) and 1367-a(4)(b); and the federal Wire Act, 18 U.S.C. § 1084(a).

How the petition describes the platform’s mechanics

According to the petition, users take “Yes” or “No” positions by buying contracts priced in cents that correspond roughly to probability percentages. A contract pays $1.00 if the predicted event occurs and nothing if it does not; the company charges a fee for each wager, in an amount the petition says varies, and permits fractional contracts with proportionately lower payouts.

The filing describes wagers placed by investigators from New York accounts. On July 6, 2026, one account placed 6.39 wagers for a total of $3.01, including a $0.10 fee, on the New York Mets to beat the Atlanta Braves; because the Mets won, the bettor received $6.39. On August 7, 2026, an account placed 94 “Yes” wagers at about $0.01 each — $1.00 including a $0.06 fee — on contestant Dee Valladares being eliminated in week four of “Big Brother Season 28.” The petition argues that “each contract is a bet” because the bettor’s return depends on a future contingent event outside the bettor’s control.

Officials’ statements and the state’s enforcement history

“By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming,” Hochul said in the announcement. James said New York’s gambling laws “exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” and accused Polymarket of “targeting the most vulnerable.”

The announcement argues the markets meet New York’s legal definition of gambling because outcomes are uncertain and outside bettors’ control, and says the company sidestepped Gaming Commission licensing and the taxes that licensed casinos and mobile sports platforms pay, which fund public schools, youth sports programs and problem-gambling treatment. It also cites a National Institutes of Health study on the harms of early gambling exposure and an American Psychological Association finding that 32 percent of those with a gambling disorder experience suicidal ideation, in the context of the platform’s availability to 18- to 20-year-olds.

The announcement places the case among the state’s recent gambling-enforcement actions: a July 2026 lawsuit against Kalshi, April 2026 suits against Coinbase and Gemini, an $8 million settlement in September 2026 with a sweepstakes-casino operator, and an April 2026 executive order barring state employees from insider trading using prediction markets.

Polymarket US’s same-day federal complaint

Also on September 24, QCX LLC d/b/a Polymarket US filed its own complaint for declaratory judgment and injunctive relief in the U.S. District Court for the Southern District of New York, No. 1:26-cv-08345, naming James and New York State Gaming Commission officials in their official capacities. The company calls the state’s “unregulated gambling” theory erroneous and an “extraordinary assertion of state power squarely foreclosed by federal law,” pointing to New York’s enforcement actions against Kalshi, Coinbase and Gemini as evidence that it faces imminent harm.

The complaint states that the Commodity Futures Trading Commission designated Polymarket US as a contract market on July 9, 2025, and argues its event contracts are “swaps” within the CFTC’s exclusive jurisdiction under 7 U.S.C. § 2(a)(1)(A), citing the Third Circuit’s decision in KalshiEX v. Flaherty. It also argues Polymarket US is not a sportsbook: prices are set by supply and demand among third-party traders, the exchange does not act as a counterparty, and it earns a flat per-transaction fee that does not vary with the outcome of an event. The company asks for a declaratory judgment that New York’s civil and criminal gaming laws are preempted by the Commodity Exchange Act as applied to it, plus preliminary and permanent injunctions against their enforcement, and notes that the CFTC has obtained preliminary injunctions elsewhere, including a Minnesota order covering Polymarket US.

The CFTC-New York jurisdiction fight behind the case

The dueling filings sit inside a broader federal-state dispute. On April 24, 2026, the CFTC itself sued New York in the Southern District of New York to halt the state’s application of gambling laws to CFTC-registered contract markets, seeking a declaratory judgment that federal law grants the agency exclusive authority over event contracts and a permanent injunction. CFTC Chairman Michael S. Selig called New York “the latest state to ignore federal law,” and the agency said the suit followed similar CFTC actions in Arizona, Connecticut and Illinois.

The CFTC’s complaint recounts the Gaming Commission’s October 2025 cease-and-desist letter to Kalshi and New York’s April 21, 2026, civil enforcement suits against Coinbase and Gemini under Racing Law § 1367 and Penal Law § 225 — the same statutory framework the state has now invoked against Polymarket US.