Prediction Markets in NY: Kalshi, Polymarket, the Lawsuits

Are prediction markets legal in New York? The state says no, the CFTC says yes

New York’s position is clear: sports, election and similar event contracts are unlicensed gambling under state law. The federal Commodity Futures Trading Commission (CFTC) says these contracts are derivatives traded on federally registered exchanges, and that only it can regulate them.

As of mid-October 2026, no court has issued a final ruling on which side is right for New York. The apps remain in court on several fronts, and the state is seeking billions in penalties.

How event contracts work vs. a sportsbook bet

A prediction market sells yes-or-no contracts that pay $1 if an event happens and nothing if it doesn’t. Prices move between 1 cent and 99 cents as traders buy and sell, so the price works like a market-implied probability.

Example: a “Yes” contract on a team winning trades at 62 cents. Buy 100 contracts for $62. If the team wins, you collect $100. If it loses, you get nothing. You can also sell before the game ends at whatever the market pays.

	Prediction market	NY-licensed sportsbook
Who you trade against	Other users, through an exchange	The sportsbook
Regulator	CFTC (federal)	NY State Gaming Commission
Minimum age	Usually 18	21
How it makes money	Trading fees	The margin built into the odds
NY tax on operator	None	51% of gross gaming revenue
NY self-exclusion	Not covered	Covered

Kalshi, for example, charges a fee on immediately matched trades based on the formula 0.07 × contracts × price × (1 − price), rounded up, according to its fee schedule. That’s highest on 50-cent contracts and shrinks toward the extremes.

Kalshi in New York: a cease-and-desist, two lawsuits and an appeal

Kalshi, the CFTC-regulated exchange headquartered in New York City, is the center of the fight. Our full Kalshi review covers the product. The legal timeline:

October 2025: the NY State Gaming Commission (NYSGC) sends Kalshi a cease-and-desist. Kalshi sues the Commission in federal court in Manhattan.
July 7, 2026: U.S. District Judge Analisa Torres denies Kalshi a preliminary injunction, writing that “Congress did not intend to preempt all possible state actions.” Kalshi appeals to the Second Circuit the same day.
July 29, 2026: a Second Circuit judge denies an emergency injunction and refers the motion to a three-judge panel.
July 31, 2026: Gov. Kathy Hochul and Attorney General Letitia James sue Kalshi in state court, seeking an injunction, disgorgement, restitution and treble fines. Press reports put the total at $36 billion or more, including $100,000 per illegal sports bet. Kalshi moves the case to federal court.
Early August 2026: a federal judge in Manhattan denies the CFTC’s emergency request to halt New York’s enforcement case. On Aug. 11, the CFTC publishes a letter saying it may compel Kalshi to keep trading if a New York court orders it to stop.

Polymarket, Coinbase, Gemini and Robinhood: where they stand in NY

Polymarket: on Sept. 24, 2026, New York sued QCX LLC, which does business as Polymarket US, in state court. The state alleges sports-betting-style markets offered since Polymarket’s U.S. launch in December 2025, users under 21, and markets on New York college teams. Press reports put the damages sought at about $4.6 billion. Polymarket countersued in federal court the same day.

Coinbase and Gemini: on April 21, 2026, Attorney General James sued both. Coinbase offers its prediction markets through Kalshi, and Gemini operates through its own exchange, Gemini Titan. The suits seek at least $2.2 billion from Coinbase and $1.2 billion from Gemini.

Robinhood: Robinhood has offered event contracts, including sports, since March 2025, initially through Kalshi. It has not been named in any of the New York lawsuits listed on this page.

CFTC vs. Albany: the federal preemption fight

The core question is whether the federal Commodity Exchange Act overrides state gambling law for contracts on CFTC-registered exchanges.

On April 24, 2026, the CFTC sued New York in federal court in Manhattan. It wants a declaration that it alone regulates event contracts, and an order stopping New York from applying gambling law to registered exchanges.

Other appeals courts are already split, according to Finance Magnates:

Third Circuit (New Jersey): ruled 2–1 for Kalshi in April 2026. New Jersey has asked the Supreme Court to review it.
Ninth Circuit (Nevada): ruled unanimously against Kalshi on Aug. 28, 2026.
Fourth and Sixth Circuits: arguments heard, with no rulings as of early September 2026.

A split between appeals courts makes Supreme Court review more likely. That could take until 2027 or later.

S9414: the state bill to ban sports and election contracts

Sen. Joseph Addabbo Jr. introduced S9414, the ORACLE Act, on March 10, 2026. It would:

Bar New York users from opening positions on athletic events, political events, deaths, security events and catastrophes.
Set the minimum age at 21.
Require self-exclusion, optional deposit and time limits, and HOPENY hotline information.
Ban “risk-free” advertising and credit-card funding.
Bar NY gaming licensees from offering prediction markets in the state.
Allow courts to order a provider to stop operating in New York, with a $1 million-a-day penalty for defying that order.

The Racing, Gaming and Wagering Committee advanced it 6–0 on May 20, 2026. It then stalled in the Finance Committee and died when the 2026 session ended. A new version would have to be filed in 2027.

What New Yorkers can and can’t do today

Here’s the practical picture as of October 2026:

You aren’t the target. Every New York action so far is aimed at the operators. None of the lawsuits seeks penalties from individual users.
Access can change fast. If a court orders an exchange to stop serving New York, sports contracts could be switched off for New York accounts with little notice. Keep only what you can afford to have tied up.
You’re outside state protections. Prediction markets aren’t covered by New York’s self-exclusion program, and the NYSGC can’t resolve a dispute with an exchange it doesn’t license.
Age rules differ. Exchanges generally accept users from 18. A licensed New York sportsbook requires you to be 21.
College markets are a flashpoint. New York bans sportsbook bets on New York college teams. The Polymarket suit says that exchange listed them anyway. Here’s what you can bet on college sports in NY.

If you want sports action with full state oversight, the 8 licensed apps in our NY sportsbook rankings are the legal route. For every vertical’s status, see New York gambling laws.

Prediction markets NY FAQ

Is Kalshi legal in New York?

It’s disputed. Kalshi is regulated by the CFTC, but New York says its sports and election contracts are illegal gambling. A federal judge denied Kalshi an injunction in July 2026, and the appeal is pending in the Second Circuit.

Is Polymarket legal in New York?

New York says no. The state sued Polymarket US on Sept. 24, 2026, alleging an unlicensed gambling operation. Polymarket has countersued and says it is staying.

Can I get in trouble for using a prediction market in NY?

New York’s lawsuits target the companies, not individual users. The bigger practical risk is losing access, or having funds tied up, if a court orders an exchange to stop serving New York.

Is an event contract the same as a sports bet?

Legally, that’s the dispute. You trade contracts against other users on an exchange rather than betting against a sportsbook, but New York argues the result is the same as a sports wager.

How old do you need to be to trade prediction markets in NY?

Exchanges generally accept users from 18. Licensed NY sportsbooks require 21, and New York’s lawsuits cite access by 18- to 20-year-olds. Bill S9414 would raise the age to 21.

What is the ORACLE Act?

It’s S9414, Sen. Addabbo’s bill to ban sports, political and other event contracts for New Yorkers. It cleared committee in May 2026 but didn’t pass before the session ended.

21+ and physically in New York. Gambling problem? Call or text 1-877-8-HOPENY (467369).