New York accuses Polymarket of flouting gambling laws

The New York State Gaming Commission has not issued a license to Polymarket or its competitor Kalshi, meaning the platforms don't pay taxes that go toward funding schools and gambling addiction programs.MANHATTAN (CN) — New York ramped up its efforts to rein in online betting, filing a lawsuit Thursday accusing the prediction market platform Polymarket of running an illegal, unlicensed gambling operation.Gambling is illegal in New York, but there are notable exceptions including the state lottery, commercial casinos, tribe- and charity-operated gaming and sports betting. Polymarket, a cryptocurrency-based platform that allows users to bet on sports and other events like election outcomes, TV shows and the weather in major U.S. cities, is restricted in several states along with its primary competitor Kalshi, which faces a New York lawsuit filed in July.Legal gambling is regulated by the New York State Gaming Commission, which has not issued a license to Polymarket or Kalshi — meaning the companies don’t pay taxes that go toward funding schools, sports programs for vulnerable youth and gambling addiction programs.“By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support,” New York Attorney General Letitia James said in a statement Thursday.James accuses Polymarket, which is valued at more than $20 billion, of putting New Yorkers, including those under the state’s legal gambling age of 21 — the platform’s age minimum is 18 — at personal and financial risk by operating as an unlicensed gambling business. She seeks a court order stopping the operations as well as fines, forfeiture and restitution.The attorney general pointed to recent National Institutes of Health and American Psychological Association studies linking pathological gambling to other mental health disorders, suicidal behaviors and substance abuse.Polymarket is “subverting New York’s express regime by facilitating gambling in New York without required responsible gambling features mandated for licensed sports wagering operations, and without any oversight by the New York State Gaming Commission, exposing New Yorkers to gambling addiction with few, if any, safeguards,” James says in the suit.She points, in addition to sports betting, to non-sports-related Polymarket offerings for speculation, like the winner of New York’s gubernatorial election and who would be eliminated from the reality TV show “Big Brother" in its 28th season, as examples of unlawful contracts.Neal Kumar, Polymarket’s chief legal officer, defended the company and referenced James’ previous suit against Kalshi in a statement Thursday.“While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users,” Kumar said, adding the lawsuit was a “media hit” and said the company is willing to speak with James’ office directly.“Any time the AG’s office wants to swing by, our door is open for a conversation about how we protect consumers and offer fair, transparent and legal markets,” Kumar said.States including Nevada, Massachusetts and Washington have all won court orders restricting Kalshi’s activity. In New York, a federal judge in July shot down Kalshi’s bid to block state regulators from regulating it.The Trump administration has worked to thwart state regulatory efforts. The U.S. Commodity Futures Trading Commission has claimed exclusive oversight of the platforms and sued states looking to rein them in.Michael Selig, the commission’s chairman, said in an April statement that “Congress specifically rejected such a fragmented patchwork of state regulations because it resulted in poorer consumer protection and increased risk of fraud and manipulation.”President Donald Trump’s son Donald Trump Jr. is a major investor in Polymarket and sits on the company’s advisory board.If you are having thoughts of suicide, call or text 988, or call the National Suicide Prevention Lifeline at 1-800-273-8255 (TALK). Visit SpeakingOfSuicide.com/resources for a list of additional resources.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads