New York has filed a lawsuit seeking to shut down Polymarket's operations in the state, according to CNN, which reported on September 30, 2026 that the suit was filed about a week earlier. The state is also suing Kalshi, which means both leading prediction-market venues are now fighting New York at the same time, according to the same report. Polymarket denies wrongdoing and has filed a countersuit in federal court, according to CNN.
State investigators say Polymarket is circumventing New York's strict regulation of licensed gambling, according to CNN. The requirements the state cites include blocking underage users, rules against predatory advertising, mandatory funding for addiction programs, and self-exclusion policies.
The move marks an expansion of New York's legal campaign beyond its earlier action targeting Kalshi, according to WeeBet, which cites reporting by Card Player. WeeBet notes that pursuing both venues in parallel suggests a coordinated strategy against the sector rather than opportunistic enforcement, and treats the development as a sector-wide warning for operators and investors.
Polymarket arrives in court with a history. The platform agreed to a $1.4 million settlement with the Commodity Futures Trading Commission in January 2022 over offering unregistered binary options to U.S. users, according to WeeBet. New York also maintains the BitLicense framework that has deterred many crypto businesses from operating in the state, according to the same report.
Under scrutiny, Polymarket has rolled out sportsbook-style responsible-trading tools, according to Gambling Insider's October 1, 2026 daily wire. Users can now voluntarily self-exclude for periods ranging from 30 days to permanently, while U.S. customers can set daily, weekly or monthly deposit limits, with reductions taking effect immediately. The company also launched a Trust & Safety Center and partnered with Birches Health to provide resources for users dealing with compulsive trading behaviors, according to the wire.
Gaming lawyer Joshua Kirschner told CNN that "there is no analogue" in existing federal law matching the range of state-level responsible-gambling tools, and said of Polymarket's new safeguards: "These protections are good for consumers... but maybe it's also a nod to try to pacify state regulators."
Analysis: the suit lands in the same window as the Sixth Circuit's ruling against Kalshi's federal-preemption defense, which we covered on September 28, so the venues are now fighting state regulators on two fronts at once. Polymarket's choice to countersue in federal court suggests it is hunting for a friendlier forum than the state proceedings behind the Kalshi decisions. A bipartisan coalition of 44 states has meanwhile argued in court that prediction platforms should be regulated like gambling, according to CNN, so a single federal win would not end the pressure.
What to watch: any cease-and-desist or injunctive filing from the New York attorney general's office, and how the parallel Kalshi litigation shapes the legal arguments on both sides, according to WeeBet. We will update this story as the cases develop. Regulatory status can change a venue's availability without notice.