New York State Sues Polymarket in Escalating Crackdown on Prediction Markets — WSJ

By Kevin T. DuganNew York state, one of the largest markets for gambling in the U.S., escalated its fight against prediction markets Thursday by suing Polymarket's domestic arm, alleging that the bet-on-nearly-everything site was illegally running a gambling operation.The state, where Polymarket and its chief rival-Kalshi-are based, has aggressively sought to rein in the rapidly growing industry. Attorney General Letitia James has brought suits against competitors with similar claims, and New York City Council Speaker Julie Menin has raised a possible investigation into the companies' marketing practices."We believe in New York and we're staying here. While the AG's decision to copy/paste a recycled lawsuit is disappointing, we'll fight for our users," Neal Kumar, Polymarket's chief legal officer, said in a statement.The crackdown in New York is among the highest-profile legal challenges prediction market operators are facing around the country, with states accusing them of running unlicensed operations that eat into their tax revenue from gambling. Conflicting rulings around the country have set up the fight to head to the Supreme Court.Prediction market operators say they are federally regulated by the Commodity Futures Trading Commission, a stance the Trump administration has strenuously backed.Polymarket U.S., the regulated entity of the company's global operation, has had a bumpy year. The company balked at launching the app widely during a banner year for sports betting, as bugs, personnel problems and compliance issues plagued the rollout. The Wall Street Journal reported that its U.S. app was flooded soon after its launch with fraudulent accounts as it chased rapid growth.In July, New York also sued Kalshi after a breakdown in negotiations between the company and Gov. Kathy Hochul's office, in a lawsuit that sought as much as $36 billion from Kalshi in penalties and disgorgement. The state has also accused Coinbase and Gemini Titan of breaking state gambling laws with their prediction markets."Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs," James said in a statement.Polymarket has a data partnership with Dow Jones, the publisher of The Wall Street Journal.Write to Kevin T. Dugan at [email protected]