A lawsuit filed Thursday in NY County Supreme Court by Attorney General Letitia James accuses Polymarket of operating an unlicensed gambling business through its decentralized prediction market. The state's civil enforcement action seeks an injunction, restitution, and civil penalties to block the platform from offering event contracts on sports, culture, and elections. Polymarket responded by filing its own lawsuit against the attorney general and has moved the state's case to the federal court for the Southern District of New York.

The legal clash is part of a broader crackdown by New York officials on prediction markets, which included a July lawsuit against rival platform Kalshi. These competing legal actions intensify a national debate over whether such platforms violate state gambling laws and which regulatory bodies have the authority to oversee them.