ALBANY – Add Polymarket to the list of prediction markets that are finding themselves on the receiving end of lawsuits filed by New York.

Gov. Kathy Hochul and Attorney General Letitia James announced Thursday a new lawsuit against Polymarket, one of the major companies in the new field of prediction markets, where users can purchase “event contracts” to potentially earn money from outcomes ranging from sports games to pop culture to political elections. In the eyes of New York and many other states, prediction markets have a simpler definition: unlicensed, illegal gambling.

“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” James said in a statement announcing the lawsuit. “By skirting New York’s laws, Polymarket is targeting the most vulnerable and depriving New York families of critical services and support.”

The state has already sued Kalshi, which along with Polymarket makes up the most widely known prediction market brands. New York has also sued prominent cryptocurrency exchanges such as Coinbase and Gemini for offering prediction markets on their platforms.

“Respondent seeks to avoid the legal and financial consequences of New York’s close regulation of gambling by offering what is quintessentially wagering under the guise of ‘event contracts’ on a ‘prediction market,'” the new lawsuit against Polymarket states. “Respondent accepts wagers from members of the public as a gambling business in New York in flagrant disregard of New York’s State Constitution, penal laws, and other statutes.”

The prediction markets have claimed their products are not gambling but rather financial derivatives, similar to futures contracts traded on exchanges and markets. Unlike gambling, such derivatives are regulated by the federal Commodity Futures Trading Commission, not by states.

Under the Trump administration, the commission under chairman Michael Selig has taken a lax approach to regulation of prediction markets, allowing them to expand into categories like sports, which now makes up a significant part of their revenue.

Both Kalshi and Polymarket have recent valuations exceeding $20 billion apiece.

Many states have taken the view that wagering on sports in prediction markets is virtually indistinguishable from wagering on sports in casinos or on betting apps – with the notable exception that the states derive none of the tax revenue that comes from legalized gambling operations. Prediction markets also allow users as young as 18 to use their platforms, despite 21 being the legal age for gambling in New York.

“I will always stand up for New Yorkers when bad corporate actors prey on consumers and threaten tax dollars that fund schools and critical public services,” Hochul, who has taken a strong stance against prediction markets, said in a statement Thursday. “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.”

Polymarket Chief Legal Officer Neal Kumar called the lawsuit a “media hit” against the company, and said it was open to working with the state rather than fighting in the courts.

“We didn’t run to preemptively sue the state – we chose to engage with them directly on the substance and address their concerns,” Kumar said in a statement. “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.”

Kalshi has been the main target for most state lawsuits, with the company having legally operated in the United States for a longer period of time. Polymarket only launched its U.S. mobile app in December after obtaining approval from the Commodity Futures Trading Commission.

New York certainly isn’t alone in going after prediction markets, with more than a dozen other states having their own lawsuits against Kalshi. But New York’s lawsuits could have a far more powerful impact on prediction markets should they prove to be successful. Under state Executive Law, companies headquartered here can be required to pay restitution to their customers for illegal profits nationwide if it’s determined a company violated statutes or regulations. Both Kalshi and Polymarket are based in New York City.

Kumar stated the company had no intention of leaving the state due to the lawsuit.

“We believe in New York and we’re staying here,” he said.

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This article originally published at New York sues Polymarket in latest legal action against prediction markets.