Invest5 publishers2 min readPublished
New York sues to ban Polymarket and fine it triple what it earned
New York sued Polymarket to bar it from the state and fine it three times its earnings, plus forfeited gains and restitution. Like the state's $36 billion Kalshi claim, the demand is only worth something if courts reject the CFTC's assertion of exclusive jurisdiction over event contracts.
The Investor · Invest desk
What happened
- New York Attorney General Letitia James and Governor Kathy Hochul sued Polymarket's US entity, QCX LLC, alleging it runs an unlicensed gambling business in the state.
- The state asks a court to bar Polymarket from New York, make it forfeit its gains, pay restitution to users and pay fines equal to three times what it earned.
- The suit follows New York's July case against rival Kalshi, in which the attorney general is seeking $36 billion on the same illegal-gambling theory.
- New York also sued Coinbase and Gemini in April over their prediction offerings, and Kentucky, Illinois and other states have brought challenges of their own.
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Why it matters
- exposure If the forfeited gains and the fine's earnings base are the same number, Polymarket faces a bill of four times its earnings from the alleged conduct before any restitution.
- decision Officials say Polymarket skipped the licenses and taxes casinos and sportsbooks pay, yet by seeking a ban New York trades any future tax from the platform for a one-time recovery.
- contradiction The platforms' defense is CFTC oversight, but CFTC staff have warned that 'mention' contracts invite manipulation, so the regulator they cite has itself questioned part of what they list.
Bernstein's analysts project prediction-market trading volumes of $1 trillion by 2030, with revenue near $10.8 billion [11]. That works out to about 1.08 cents of revenue on every dollar traded [3]. Measured against that forecast, the Kalshi claim is $36 billion over $10.8 billion, or about 3.3 times the revenue the whole industry is projected to earn in 2030 [1]. The reports do not explain how the state reached the Kalshi figure, and they do not give a dollar amount for the Polymarket demand.
The legal theory is short. The complaint said Polymarket "seeks to avoid the legal and financial consequences of New York's close regulation of gambling by offering what is quintessentially wagering under the guise of 'event contracts' on a 'prediction market'" [8]. It cites the sports contracts on the mobile app Polymarket launched in December 2025, along with its advertising to New Yorkers [7]. James framed the harm as lost public money. "By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support," she said [4].
Everything turns on who regulates event contracts. The platforms say they are federally regulated venues under the Commodity Futures Trading Commission, and the Trump administration has taken their side [12]. CFTC Chair Michael Selig has claimed the agency has "exclusive jurisdiction" [13]. If that position holds in court, New York's treble fine and its Kalshi figure are worth close to nothing. A Supreme Court ruling for New Jersey on its pending Kalshi petition would raise the value of every state suit at once [14]. Without a ruling, the fight stays in state courts, one case at a time.
I think the dollar figures measure New York's leverage in a jurisdiction fight and say much less about what the state will actually collect. That view is wrong if Polymarket settles with New York, or a New York court rejects the federal defense, before the Supreme Court acts on the New Jersey petition.
What to watch
- Whether the Supreme Court agrees to hear New Jersey's Kalshi case and so takes up the state-versus-CFTC jurisdiction question for every state suit.
- A dollar figure for the Polymarket demand in New York's court papers, to set against the $36 billion sought from Kalshi.
- Any CFTC action on its staff warning about 'mention' contracts, or a federal move to intervene in the New York cases.