Prediction Markets: Why New York Is Suing Polymarket

On 24 September 2026, New York's attorney general, Letitia James, sued Polymarket's US business, calling its prediction markets an illegal, unlicensed gambling operation. Polymarket sued the state back the same day. The dispute is about one question — whether a contract on the outcome of an event is a financial derivative or a bet — and it arrives as prediction markets have become very large: combined monthly volume on Kalshi and Polymarket doubled from $25.7 billion in May to $53.0 billion in July.

Key facts

• The lawsuit: announced on 24 September 2026 against QCX LLC, which operates as Polymarket US.
• What New York wants: an order stopping the business in the state, forfeiture of gains, damages of three times those gains, and restitution.
• Polymarket's position: it is regulated federally by the Commodity Futures Trading Commission, which claims exclusive authority over these markets.
• The size: $53.0 billion traded across Kalshi and Polymarket in July 2026, according to Pew Research Center's analysis of data from The Block.
• What drives it: sports. In July, sports accounted for $31.4 billion on Kalshi and $10.6 billion on Polymarket.

What is a prediction market?

A market where the thing traded is a yes-or-no question.

A contract pays one dollar if an event happens and nothing if it does not. If it trades at 62 cents, the market is saying the event is about 62% likely. Buyers and sellers set that price between them, and it moves as news arrives. The claim made for these markets is that a price backed by money is a better forecast than a poll.

Is it finance or gambling?

That is the entire case.

The federal view is that an event contract is a derivative, like a future on wheat, and belongs to the commodities regulator. New York's view is that staking money on the result of a game is gambling whatever the contract is called, and gambling is licensed by states. The state also points to an age gap: New York's betting age is 21, and the platform accepted users from 18.

The numbers explain why the states care. Elections made these markets famous, but politics is a small share of the trading — around $2 billion a month on Polymarket this year, and under $300 million on Kalshi. The volume is sports, and sports betting is a business states already license and tax.

Should you trust the volume figures?

With some care. Reported volume on some products has drawn scrutiny over whether all of it is organic, and a headline number counts every contract that changed hands, not money at risk. Both are worth remembering before treating a market's size as proof of its accuracy.

A price is also only as good as the rule that settles it. Every market needs someone, or something, to declare the outcome. When the question is clear that is trivial; when it is ambiguous, the dispute is about the wording, and the wording was written by the platform.

What does this have to do with blockchains?

Settlement. Polymarket's international markets run on smart contracts, with positions held as tokens and outcomes reported by an oracle. That makes the mechanism inspectable in a way a bookmaker's is not: the contract that holds the collateral is public, and so is every trade.

Inspectable is not the same as safe, which is the point of why audited contracts still get drained, and legality is decided by where you are, not by where the contract is deployed. A contract on any EVM chain, Nura Chain included, can be read by anyone — how to read the Nura Chain explorer shows how — but reading it tells you what the code does, not whether you are permitted to use it.

This is not legal advice. The case is set out in the New York attorney general's announcement, and the volume data in Pew Research Center's analysis.