New York Attorney General Letitia James has filed a lawsuit against Polymarket, labeling it an "illegal, unlicensed gambling operation." The lawsuit alleges that Polymarket, which markets itself as a prediction market, is in reality facilitating illegal sports betting. This legal action mirrors a similar lawsuit filed against another prediction market platform, Kalshi, by New York officials, indicating a broader crackdown on such platforms in the state. New York has emphasized that these platforms operate without consumer protection and regulatory oversight, posing risks to New Yorkers.
Polymarket has faced increasing scrutiny and legal challenges, including an extensive investigation by the US Commodity Futures Trading Commission (CFTC) into its prediction market operations. This investigation was ongoing as of June 2026. The CFTC had previously ordered Polymarket to pay a $1.4 million civil monetary penalty in 2022 and wind down its US operations, which Polymarket subsequently resumed without proper licensing or regulatory oversight.
The company has experienced significant growth, with its lifetime sports-related contract volume surpassing $6 billion. The 2025 Super Bowl alone generated approximately $1.1 billion in wagers on Polymarket, highlighting a substantial shift in its primary revenue source from politics to sports betting. Despite regulatory challenges, Polymarket made strategic moves in late 2025, including acquiring QCX LLC and QC Clearing, a CFTC-licensed derivatives exchange, for $112 million in July 2025, and securing a $2 billion investment from Intercontinental Exchange (ICE) in October 2025, valuing the company at $8 billion to $9 billion.
However, its operations continue to draw fire. In January 2026, the Nevada Gaming Control Board sought an injunction against Polymarket for unlicensed wagering, and the Tennessee Sports Wagering Council issued a cease-and-desist letter. A class-action lawsuit filed in February 2026 accused Polymarket of operating an illegal online sports gambling platform across the US, violating laws in over two dozen states, and sought to recover millions of dollars lost by users. One plaintiff claimed to have lost approximately $5,000 in California between December 2025 and January 2026.
