# New York and Polymarket Trade Legal Challenges Over Prediction Market Legality New York State Attorney General Letitia James and Governor Kathy Hochul announced together that they are suing Polymarket US, arguing that the prediction platform is running illegal, unlicensed gambling operations in New York. Polymarket previously returned to the U.S. market after obtaining regulated exchange infrastructure and operating within the federal commodities framework. But New York State’s stance is clear: the federal setup cannot override state gambling laws. The Attorney General’s office said its investigation found that Polymarket allowed users to place bets on sports events without a New York gambling license, and also exposed markets to users below New York’s legal gambling age of 21. The lawsuit asks the court to halt its so-called unlicensed gambling business, while seeking fines, forfeiture of alleged illegal proceeds, and compensation for users. This case really highlights a longstanding structural problem with prediction markets: at the federal level, event contracts may fall under the commodities and futures framework; but at the state level, gambling law interpretation follows a different logic. When the two sides clash, the platform ends up stuck in the middle. If prediction markets want to grow, the jurisdiction challenge is unavoidable. Do you think the federal framework will ultimately prevail—or will each state keep plugging the gaps one by one? 👉 Click to enter my chat room for the latest strategies!