New York Sues Polymarket, Alleging Illegal Gambling Operation Without License

New York state has filed a lawsuit against Polymarket, alleging the prediction market platform operates as an illegal gambling operation without proper licensing. The state seeks to block Polymarket's operations and recover allegedly illegal gains. Polymarket has countersued, denying the gambling classification and asserting its regulatory compliance.

The dispute centers on whether prediction markets constitute gambling under state law or qualify as exempt financial instruments. This marks a significant regulatory test for the emerging prediction-market sector ahead of the 2026 midterm elections.

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