New York extends its prediction-market gambling crackdown to Polymarket

Franco Granda, a senior research analyst at PitchBook, told American Banker that with New York having already taken action against Kalshi, Coinbase and Gemini, a similar action against Polymarket was foreseeable ^[2]. "Investors should treat litigation against individual prediction markets as a risk across the industry," he said ^[3].

The complaint supports him. New York argues Polymarket's markets are 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" ^[4]. That test describes an event contract, whoever lists it. Neal Kumar, Polymarket's chief legal officer, made the same point from the defendant's side. "While the Attorney General's decision to copy and paste a recycled lawsuit is disappointing, we'll fight for our users," he said ^[5].

The money is in the remedies. The state wants three times any gains plus $100,000 for each attempt or offer of "sports wagering or mobile sports wagering" in New York ^[6]. It also wants a court order barring Polymarket from operating without a state gambling license ^[7]. The per-offer term counts listings, or rather attempts and offers, and does not depend on whether a market made money: 1,000 of them would come to $100 million ^[19] before the treble-gains figure is added. The complaint as reported does not say how many sports markets Polymarket U.S. has offered New Yorkers.

One path runs through Washington. The CFTC has sued several states, asserting its right to regulate these markets ^[14], and American Banker reports that the question of who regulates may be decided by the Supreme Court ^[8]. A ruling for federal authority would undercut New York's actions against all four companies at once ^[20]. Another path is a state win on the gambling definition. Each operator would then need a Gaming Commission license or would have to leave New York, and the per-offer penalty would apply to each of them. A third is a run of separate settlements, each firm negotiating its own fine. The risk would then be company-specific again.

I think the first two paths are the likelier ones, so the risk is correlated. A settlement that accepts a state license would concede the authority the CFTC is suing states to defend, and Polymarket U.S. has been CFTC-regulated since its December 2025 debut ^[13]. The counter-case comes from Granda himself. "Right now, Kalshi is bearing most of the burden when it comes to court appearances, but one could assume Polymarket will be targeted next," he said ^[9]. Separate courts on separate schedules can split. The correlated view is wrong if a court rules on one firm's conduct and leaves the definition alone. The Polymarket complaint already contains that kind of fact. It says the platform allows users over 18 and cites a state addiction-services report calling 18-to-24-year-olds "high-risk" ^[10].

"The commercial question extends beyond potential fines and customer access," Granda said. "In my view, it could impact partners' willingness to commit resources and the valuation investors are willing to pay." ^[11] Some partners have already committed. CNBC, which reported the Polymarket suit, disclosed a commercial relationship with Kalshi that includes customer acquisition and a minority investment ^[18].