Polymarket countersues New York state over gambling allegations

Prediction market platform Polymarket has countersued New York state after state Attorney General Letitia James accused the company of violating the state's gambling laws through what her office characterized as "unregulated gambling."

The countersuit follows a similar action New York brought against rival prediction market Kalshi roughly two months earlier, suggesting the state attorney general's office is pursuing a broader campaign against prediction market platforms operating in New York without what it considers appropriate gambling licenses.

A contested legal question

Prediction markets like Polymarket and Kalshi allow users to trade on the outcomes of real-world events, a business model that has increasingly drawn scrutiny from state and federal regulators over whether such trading constitutes a form of gambling subject to state licensing requirements, or falls under a different regulatory framework such as commodities trading.

Polymarket's countersuit signals the company's intent to challenge New York's characterization of its platform directly in court, rather than simply defending against the state's claims. The outcome of the dispute could carry implications for how prediction markets are regulated more broadly across US states.

Details of the specific legal arguments raised in Polymarket's countersuit were not fully outlined in available reporting.