New York Sues Polymarket: Removed to Federal Court

New York's Attorney General filed a verified petition against Polymarket US on September 24, 2026, asking a Manhattan state court to shut it down as an unlicensed gambling business. Hours later a federal docket opened in the same city - case 1:26-cv-08338, People of the State of New York, by Letitia James v. QCX LLC d/b/a Polymarket US - and its first entry is a Notice of Removal.

The petition names one respondent: QCX LLC, doing business as Polymarket US, a Delaware limited liability company whose principal place of business the filing puts in New York, New York. It was brought as a special proceeding under New York Executive Law § 63(12), the repeated-illegality statute that lets the Attorney General apply for an injunction, restitution and disgorgement without first proving fraud.

What is New York asking the court to do?

Not just to stop the platform. The prayer for relief runs to twelve lettered paragraphs. It asks the court to permanently enjoin Polymarket from offering these contracts without the required Gaming Commission licences, from "permitting wagering by persons under the age of 21 in connection with any contract on those events", and from advertising them on college campuses. It also asks for an accounting "identifying each of its customers and itemizing bets placed by customers, monies lost by customers, and gains received by Respondent", plus full restitution, damages, disgorgement and prejudgment interest.

Two of the money items are worth reading closely. Under Penal Law § 80.10 the state wants "a penalty of three times the amount of its gain from the violations of law alleged herein". Under Racing Law § 1367(16)(a) it wants "one hundred thousand dollars ($100,000) for each offering or attempt to offer sports wagering or mobile sports wagering within or from New York without authorization" - a per-offering figure, not a single fine. The petition says the business behind the platform "reportedly is valued at more than $20 billion" and that its US annualised revenue is "reportedly well over $1 billion", both attributed in the filing to a news article rather than to the company.

The legal theories are stacked: eight causes of action covering the state constitution's gambling ban at Article I, Section 9; Penal Law §§ 225.05, 225.10 and 225.20; three provisions of the Racing Law; and the federal Wire Act at 18 U.S.C. § 1084(a). Every one of the eight is pleaded "Pursuant to Executive Law § 63(12)", which is what lets a regulatory theory travel as a special proceeding rather than a conventional complaint.

Did Polymarket move the case to federal court?

A federal docket for the case exists and its contents say so. The public court record shows case 1:26-cv-08338 in the Southern District of New York, captioned with the same parties as the state petition, with three documents all filed on September 24, 2026: document 1, "Notice of Removal"; document 2, "Civil Cover Sheet"; and document 3, "Rule 7.1 Corporate Disclosure Statement". That trio is the standard opening package for a removal, not a lone stub entry. None of the three is free to read on the public mirror, so we can report that the entries exist and what the clerk called them, and not what any of them argues.

Removal is the move this industry has run in state after state: take the state's gambling case into federal court and argue that the Commodity Exchange Act and the CFTC's authority over event contracts displace state gambling law. QCX itself ran it last month, removing Baltimore's gambling case on August 17, three days after Kalshi removed its own. It has had mixed results. Connecticut's federal court rejected the preemption argument in August, a Washington court rejected it too and ordered geofencing, and New Jersey has asked the US Supreme Court to settle it.

Here is the detail that stands out in the state's own paperwork: across 33 pages, the petition never uses the words "CFTC", "Commodity Futures", "Commodity Exchange Act" or "preemption" once. New York has written a pure state-gambling pleading and left the federal question to be raised by the other side.

What does the petition say about players under 21?

It says Polymarket lets them in. Paragraph 55 reads that the respondent "permits bettors under the age of 21, but at least 18 years of age to open an account", and paragraph 67 that it "does not prohibit bettors between the ages of 18 and 21 from placing wagers on its Platform". New York's Racing Law defines a minor for sports wagering as anyone under 21.

The filing also sets out what an unlicensed operator does not have to provide. Paragraph 82 lists "procedures to prevent underage gambling", "procedures to identify bettors battling a gambling addiction", and "guardrails to allow consumers to exclude themselves from the platform". That is the practical difference for anyone with money on the platform: there is no state-mandated self-exclusion, no state-supervised age check and no regulator to complain to in New York.

How did the Attorney General build the case?

With wagers placed from a New York account and timed to the minute. Three of them carry the case:

The petition calls the account holder "a bettor in New York with a New York-based account" and sources each wager to the affirmation of Brian Metz, sworn on September 22 and filed in support, with screenshots, written confirmations and video as exhibits. It does not say in terms that the account was the office's own.

What has Polymarket said about the New York lawsuit?

It is fighting. Chief legal officer Neal Kumar told the Washington Examiner: "While the AG's decision to copy/paste a recycled lawsuit is disappointing, we'll fight for our users. We didn't run to preemptively sue the state - we chose to engage with them directly on the substance and address their concerns. They preferred the media hit." In a statement to amNewYork he added: "Polymarket was founded in a tiny NYC apartment and now has more than 350 employees here, embodying why people and businesses come here to make it. We believe in New York and we're staying here."

New York is not the only case it is defending. A DC class action alleging staged winning bets reached federal court on September 2, 2026.

Why does this matter to sweepstakes players?

Because it is the same office, the same statute and the same theory that closed the sweeps market in New York. The Attorney General's own release places this filing in a line that runs through the $8 million VGW settlement announced this month, the Kalshi suit in July, actions against Coinbase and Gemini in April, a suit against Valve in January, and the enforcement action that stopped 26 illegal online sweepstakes casinos in June 2025. Different instruments, one office, and in this petition Executive Law § 63(12) carries every cause of action. The traffic runs both ways: Novig won a CFTC exchange licence, sued New York and retired its sweeps coins inside the same summer.

If you are in New York, nothing about this filing changes what is available to you today: dual-currency sweepstakes casinos are already out, and our guide to where sweepstakes casinos are legal tracks the states where they are not. If you are elsewhere, the point is the direction of travel - state AGs are treating prediction markets exactly as they treated sweeps coins, and the best sweepstakes casinos list is shaped by which states have already made that call.

Sources & documents

• Attorney General James and Governor Hochul announce lawsuit against Polymarket - the September 24, 2026 release, including both quoted statements and the list of prior New York gambling actions
• Verified petition, People of the State of New York v. QCX LLC d/b/a Polymarket US - 33 pages, stamped "RECEIVED NYSCEF: 09/24/2026"; the source of every paragraph number, statute citation and dollar figure quoted above
• Federal docket 1:26-cv-08338, Southern District of New York - three entries, all filed September 24, 2026: "Notice of Removal", "Civil Cover Sheet" and "Rule 7.1 Corporate Disclosure Statement"
• CourtListener entry search for Polymarket filings since September 18 - how the federal docket was found
• Washington Examiner report and amNewYork report - the two outlets carrying Polymarket's statements, each quoted above with attribution

Every document above was retrieved on September 24, 2026. None of the three federal filings is available free on the public mirror, so this article reports each entry's existence, date and clerk's label and makes no claim about its contents. The copy of the petition on the Attorney General's site is stamped "INDEX NO. UNASSIGNED" and carries the NYSCEF notice that the County Clerk had not yet reviewed it. The public mirror lags the court's own system, so the docket may have moved since we read it.

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