New York sued Polymarket US for allegedly running an “illegal gambling business,” escalating the legal fight against prediction markets in the state. Hours later, Polymarket struck back with a suit against the state, accusing New York of overstepping its authority to police a federally regulated exchange.

The state lawsuit filed Thursday by Attorney General Letitia James’ office seeks a court order blocking Polymarket from operating as an unlicensed gambling business and requiring the company to pay fines, forfeit all illegal gains and pay restitution to users. It’s the latest legal clash for the industry, which offers users a platform where they can place wagers on just about anything.

Governor Kathy Hochul said, “Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.” Polymarket Chief Legal Officer Neal Kumar said the company called New York home and tried to engage with state officials. “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,” Kumar said. “While the AG’s decision to copy/paste a recycled lawsuit is disappointing, we’ll fight for our users.”

Polymarket said its U.S. operations are overseen by the CFTC and alleged New York is undermining the CFTC’s exclusive jurisdiction. The CFTC also didn’t respond to a request for comment.