New York bets Polymarket can't call this one: a $36B-shaped lawsuit 🎰

New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit Wednesday against QCX LLC, which operates as Polymarket US, accusing the prediction-market platform of running an unlicensed gambling business in the state. The suit alleges Polymarket's markets meet New York's legal definition of gambling because users wager money on outcomes outside their control, and it asks a court to bar the company from operating in New York, force forfeiture of gains, order restitution to users, and impose fines equal to three times what it earned through the alleged conduct. Polymarket launched in the U.S. in December 2025 with markets on sporting events and, in the company's words, "everything." James said "by skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support," noting that gambling revenues fund educational and public benefit programs. Hochul added that Polymarket had "put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming." The attorney general's office said its investigation found the platform is an illegal, unlicensed operation that exposes New Yorkers, including those under the legal gambling age of 21, to serious financial and personal risk, and that the company has sidestepped the licensing requirements and taxes paid by regulated casinos and mobile sportsbooks.

Prediction markets let users buy and sell contracts tied to real-world events such as elections, sporting results and economic data, with each contract resolving to a fixed value at settlement, typically $1 if the outcome occurs and $0 if it does, turning a contract's live price into an implied probability, so a contract trading at 60 cents reflects roughly a 60% chance. The category has expanded from a crypto-native curiosity into a mainstream sector, with Kalshi and Polymarket both reaching multi-billion-dollar valuations after large fundraises. Analysts at Bernstein now project prediction-market trading volume could reach $10 trillion a year by 2035, roughly 24 times the $410 billion the firm expects the market to process this year and 10 times its earlier forecast for 2030, according to a Tuesday client memo from analyst Gautam Chhugani, who estimated volumes would compound at roughly 70% a year through 2035. An earlier Bernstein projection had pegged volumes near $1 trillion and revenue around $10.8 billion by 2030.

The New York action extends an aggressive state-level campaign against prediction markets, after James and Hochul sued rival Kalshi in July, with the attorney general seeking $36 billion over what she similarly characterized as illegal gambling. New York has also pursued related action against other prediction-market operators.