New York has sued Polymarket’s U.S. operation, alleging that the prediction market platform is offering gambling services in the state without the required license.

New York Attorney General Letitia James and Governor Kathy Hochul filed the case Thursday against QCX LLC, the entity operating as Polymarket US. The state is asking a court to halt the company’s New York operations unless it obtains a gambling license.

The lawsuit also seeks to recover proceeds that officials characterize as illegally obtained. New York is requesting restitution for customers and penalties equal to three times the allegedly unlawful gains.

Polymarket launched its U.S. platform in December 2025 with contracts based on sporting events and said it planned to expand into other market categories.

New York officials argue that the contracts qualify as gambling because participants risk money on outcomes that have not yet been determined. The state further alleges that Polymarket permits users aged 18 to 20 to participate, despite New York’s 21-year minimum age for mobile sports betting.

Polymarket did not immediately comment on the lawsuit.

The case adds another front to the regulatory dispute surrounding prediction markets, with operators and state gambling authorities divided over which rules apply to event contracts.

Prediction market companies have maintained that their contracts are financial products subject to federal oversight from the Commodity Futures Trading Commission (CFTC). States, particularly in disputes involving sports contracts, have argued that these products are effectively wagers and therefore fall under state gambling regulations.

New York has previously challenged prediction market operator Kalshi. The state filed a lawsuit against the company in July after talks with Hochul’s office failed, seeking as much as $36 billion in penalties and disgorgement. Other disputes between prediction market firms and states have moved through appellate courts, while the Kalshi-New Jersey case has been appealed to the U.S. Supreme Court.

James said the state’s gambling regulations are intended to protect consumers, reduce potential harm from problem gambling and preserve revenue for education and other public programs.

The Polymarket case was filed less than a year after the company returned to the U.S. market.