New York files illegal gambling lawsuit against Polymarket

New York filed an illegal gambling lawsuit against Polymarket, the state's complaint alleging that the company runs a gambling business without a New York gaming license. Polymarket's response was to shift the matter into federal court, and the company brought a separate action of its own against New York gaming officials.

The remedies New York wants include an injunction, restitution and disgorgement, plus penalties of $100,000 for every alleged unauthorized offer or attempted offer of sports wagering. According to the state, Polymarket lets users aged 18 to 20 onto its platform, whereas New York sets the minimum age for mobile sports bettors at 21.

In Polymarket's view, the case belongs in federal court: New York's Wire Act allegation supplies one basis, and the suit also turns on the Commodity Exchange Act (CEA) and on the Commodity Futures Trading Commission's (CFTC) authority over event contracts. The company wants declaratory and injunctive relief that would block state gambling laws from being enforced against its federally regulated exchange, and it contends the CEA grants the CFTC exclusive jurisdiction over its event contracts.

In the same federal district, that theory ran into a judicial rebuff. U.S. District Judge Analisa Torres declined in July to grant Kalshi a preliminary injunction, finding that the company had not demonstrated that the CEA preempts New York's gambling laws as they apply to its sports event contracts. Kalshi is now challenging that decision on appeal.

The Kalshi suit from New York dates to July. Coinbase and Gemini have likewise been sued by New York, and the CFTC has brought its own suit against the state.