The Empire State Became The Third Jurisdiction To File Suit Against the prediction market operator Polymarket

The back-and-forth legal war between states and prediction markets has often been centered around Kalshi, but Polymarket now finds itself in the legal crosshairs of New York. The state filed suit against the prediction market operator last week, accusing it of running unlicensed gambling and seeking a judicially-mandated geoblock.

New York is also demanding that Polymarket to forfeit all illegal gains, make whole anyone who has lost money there, and pay fines equal to three times the company’s gains.

Given that Polymarket US is presently doing billions of dollars worth of trades per month, and New York is one of the most populous states, that could amount to quite a hefty sum.

Polymarket responded by countersuing New York. It called the suit “erroneous” and said New York, like all states, has no business directing the federally regulated exchange to do anything.

“We believe in New York and we’re staying here,” Polymarket Chief Legal Officer Neal Kumar said.

Polymarket’s Legal Bill Could Soon Start Rivaling Kalshi’s

While Kalshi has been busy fighting legal battles on multiple fronts, Polymarket has not racked up quite as many billable hours in its ongoing attempts to serve U.S. customers. That may be starting to change, as a few states have begun coming after the international giant.

Wisconsin has previously filed a lawsuit naming Polymarket, as has Kentucky. Nevada has also secured a court order barring Polymarket from offering its products there.

Kalshi’s volume makes it the most obvious target when lawmakers get wind of prediction markets and decide to take action. According to Ticker Tracker, Kalshi has done about 10 times the volume of Polymarket — $263 billion to $25 billion. That gap has narrowed a bit recently, with Polymarket US checking in at closer to 14% of Kalshi’s volume in September. But Kalshi remains the clear market leader by far, volume questions aside.

Polymarket also has arguably more institutional backing than Kalshi. While both companies have the financial backing of the Trump family, Polymarket also has the owner of the New York Stock Exchange behind it. Last year, Intercontinental Exchange invested $2 billion in the operator.

Compared with Kalshi, Polymarket has more of a fallback plan if things go south on the legal and regulatory front in the U.S. Polymarket could completely shut down Polymarket US and still run a profitable business offshore, its crypto-focused international product.

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