New York State Attorney General Letitia James speaks during a press conference regarding legislation on artificial intelligence on September 21, 2026 in New York City.

New York State filed suit against Polymarket U.S. on Thursday, nearly two months after the state sued the platform's competitor, Kalshi.

"By skirting New York's laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support," state Attorney General Letitia James said in a statement.

The lawsuit claims Polymarket operates an illegal gambling platform and is in violation of state gambling laws, including having no license with the New York State Gaming Commission. The lawsuit further claims Polymarket allows activity by users over 18 and cited a report from the state's Office of Addiction Services and Supports that those between 18 and 24 are at "high-risk" of gambling addictions.

"By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming," Governor Kathy Hochul said in a statement.

Penalties and earnings

The lawsuit asks for penalties, including three times the amount of any Polymarket gains, and to pay $100,000 for each attempt or offer of "sports wagering or mobile sports wagering" in New York. The lawsuit also asks Polymarket U.S. to provide an account of all trades placed on the platform, the money lost by users and the amount Polymarket U.S. earned.

Polymarket U.S. debuted in December 2025 and is regulated by the Commodity Futures Trading Commission, the federal agency that regulates prediction markets platforms. The company also runs an offshore predictions platform, which was founded in 2020. The CFTC didn't immediately respond to a request for comment.

The lawsuit is the latest in the escalating regulatory feud between states and the platforms. The CFTC has retaliated, suing several states and asserting it has the right to regulate the markets.

Polymarket defended itself against the latest New York action.

""Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. 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," said Neal Kumar, the chief legal officer for the platform.

- Davis Giangiulio contributed to this report.

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.