New York Attorney General Letitia James moved on September 24 to block Polymarket from offering sports event contracts in New York, filing a verified petition in New York Supreme Court, New York County. One day later, the U.S. Court of Appeals for the Sixth Circuit handed Kalshi a separate loss in its fight to keep state gambling regulators away from sports-linked event contracts.
The two cases do not involve the same defendant or the same courthouse. They do, however, press the same industry-defining question: whether sports prediction contracts are federally regulated derivatives that states must leave to the Commodity Futures Trading Commission, or gambling products that state gaming laws can reach.
What did New York file against Polymarket?
James filed a verified petition in New York Supreme Court, New York County, accusing Polymarket of offering sports wagering in New York without a license from the New York State Gaming Commission. The petition seeks an order barring Polymarket from operating in the state, civil penalties of up to $100,000 for each unlawful wager offered, treble damages on illegal gains, and restitution.
The petition says Polymarket has advertised and solicited gambling activity to New Yorkers since at least July 21, 2025. It also says Polymarket launched its U.S. app in December 2025. The state’s theory is that sports event contracts on Polymarket function as wagers under New York law, even if the platform describes them as event contracts or prediction markets.
James’s office argues that Polymarket has not obtained a New York sports wagering license and is therefore operating outside the licensing, age-verification, tax, and consumer-protection structure that applies to legal mobile sportsbooks in the state. The petition says New York requires mobile sports wagering customers to be at least 21 years old, while Polymarket allegedly allowed users as young as 18 to participate.
Governor Kathy Hochul joined James in announcing the action. James said in the announcement that Polymarket was “skirting New York’s laws” and “targeting the most vulnerable” residents. Those statements frame the case as a state consumer-protection and gambling-enforcement action, not only as a fight over federal commodities law.
How did Polymarket respond?
Polymarket answered New York’s state-court action with a federal lawsuit in the Southern District of New York, arguing that the Commodity Exchange Act preempts New York’s effort to regulate its contracts as gambling. Reuters reported that Polymarket’s federal complaint described the state’s action as “an extraordinary assertion of state power.”
That defense tracks the core argument prediction-market operators have made in other sports-contract disputes: contracts listed on federally regulated exchanges should be governed by the CFTC and federal commodities law, not by state-by-state gambling regimes. For platforms that want to offer event contracts nationally, the practical difference is large. A federal-only regime points toward one regulatory framework; state gambling jurisdiction points toward licensing fights in every state that objects.
New York’s petition and Polymarket’s federal complaint are now moving on separate procedural tracks. The state filed in New York Supreme Court, while Polymarket filed in the Southern District of New York and has sought to pull the dispute into federal court. The venue question matters because a federal judge could address preemption before the state court reaches the merits of New York’s gambling-law claims.
What did the Sixth Circuit decide against Kalshi?
On September 25, the U.S. Court of Appeals for the Sixth Circuit rejected Kalshi’s bid to keep Ohio and Tennessee from applying state gambling laws to its sports-related event contracts. Judge Julia Smith Gibbons wrote for a unanimous panel. The decision vacated a preliminary injunction that had blocked Tennessee from enforcing its gambling laws against Kalshi and upheld a lower court’s denial of similar relief in Ohio.
The Sixth Circuit’s opinion focused on whether Kalshi’s sports contracts clearly fell within the federally protected derivatives framework that Kalshi invoked. The panel was not persuaded that contracts tied to sports outcomes, including markets involving events such as soccer corner kicks, clearly served the kind of risk-management function that federal commodities law is designed to protect.
That reasoning cuts directly against Kalshi’s preemption argument. If a court views the product as a sports wager rather than a commodity derivative with a risk-transfer function, the case for exclusive CFTC jurisdiction becomes harder to sustain. The Sixth Circuit did not decide every future sports-contract dispute, but it gave Ohio and Tennessee a significant appellate ruling in favor of state enforcement authority.
A Kalshi spokesperson said after the ruling that the outcome showed the difficulty of a state-by-state system for a company trying to operate nationally under one regulatory framework. That is the business pressure behind the legal argument: prediction-market platforms want federal approval to travel across state lines, while state regulators argue that sports wagering has long sat within their police powers.
Why do the Polymarket and Kalshi cases matter together?
The New York action against Polymarket and the Sixth Circuit ruling against Kalshi show state regulators pressing the same theory against different platforms: sports-linked event contracts are wagers when they let users take positions on the outcome of games or in-game events. The platforms respond that their contracts are federally regulated financial instruments, not sportsbook products.
The fight has already produced conflicting appellate results. The Sixth Circuit’s September 25 ruling sided with state authority in the Ohio and Tennessee disputes. The Ninth Circuit ruled in August that Nevada could apply its gambling laws to Kalshi. The Third Circuit reached the opposite result in litigation involving New Jersey, accepting Kalshi’s federal-preemption argument in that case.
That split increases the stakes for every new state enforcement action. A platform that wins in one circuit may still face enforcement in another. A state that loses on preemption in one appellate court may still find support in a different region. Until the CFTC, Congress, or the U.S. Supreme Court resolves the boundary more definitively, the industry is likely to remain shaped by venue, timing, and the exact contract terms at issue.
For New York, the Polymarket petition also fits into a broader enforcement posture against financial and gambling products the state views as operating outside its licensing structure. For Polymarket, the case tests whether its event-contract model can survive direct state gambling claims in one of the country’s most important financial and gaming markets.
Is New York treating sports prediction contracts like mobile sportsbooks?
Yes. The New York petition treats Polymarket’s sports markets as unlicensed sports wagering, not as a neutral information product or a federally insulated financial contract. The state’s requested remedies mirror that position: an operating ban in New York, penalties tied to allegedly unlawful wagers, damages, and restitution.
The state’s age-limit allegation is central to that framing. Licensed mobile sportsbooks in New York must restrict betting to customers who are at least 21. By alleging that Polymarket exposed users as young as 18 to wagering, James’s office is positioning the case around the same consumer-protection obligations that apply to regulated sportsbooks.
Tax revenue is another part of the state’s theory. New York argues that unlicensed sports wagering deprives public programs of revenue that licensed operators are required to pay. That claim is not only about Polymarket’s legal classification. It is also about whether event-contract platforms can compete with sportsbooks without bearing the same licensing costs and tax obligations.
What happens next?
The next phase is procedural but important. New York’s petition remains rooted in state-court enforcement claims, while Polymarket’s federal lawsuit in the Southern District of New York asks a federal court to treat the dispute as a preempted commodities-law matter. The first major milestone will be whether the federal court accepts Polymarket’s effort to move the fight into a federal preemption posture before New York’s state-court claims proceed.
Kalshi’s next step is separate. After the Sixth Circuit’s September 25 ruling, the company can seek further review, but the ruling currently leaves Ohio and Tennessee with stronger authority to enforce their gambling laws against Kalshi’s sports-related contracts. Together, the September 24 New York petition and the September 25 Sixth Circuit decision put the industry’s sports-contract strategy under its sharpest state-law pressure yet.
