Letitia James, the Attorney General of New York, has initiated legal actions against Coinbase Financial Markets and Gemini Titan, claiming that their prediction market platforms operate as illegal gambling under state regulations.
The lawsuits assert that these firms did not secure the necessary licenses from the New York State Gaming Commission while enabling users to wager on various event outcomes, including sports, elections, and entertainment trends.
James pointed out that the platforms’ event contracts align with the legal definition of gambling, as the outcomes are beyond the control of bettors and depend largely on chance.
Furthermore, authorities have accused the platforms of permitting individuals aged 18 to 20 to participate, despite New York’s legal betting minimum age being 21.
“Gambling by any other name is still gambling, and it remains subject to New York’s regulatory framework and Constitution,” Attorney General James stated.
She emphasized that “the so-called prediction markets from Gemini and Coinbase are merely illegal gambling platforms, putting young individuals at risk on addictive services that lack essential safeguards. My office is taking measures to uphold the law and protect New Yorkers.”
In these legal proceedings, the state aims to recover illegal earnings, impose civil penalties that may reach three times those earnings, and provide restitution for affected consumers. Additionally, it seeks a court order to prohibit wagers from individuals under 21 and to limit advertising on college campuses. The lawsuits also include allegations about betting on games featuring New York college teams.
Prediction markets gained significant traction during the 2024 U.S. presidential election, where these platforms successfully predicted Donald Trump’s win over Kamala Harris.
Coinbase and Gemini introduced their prediction market services in mid-December and claimed to operate these services across all 50 states in the U.S., according to court documents.
These lawsuits arise amidst a larger jurisdictional conflict between state regulators and the Commodity Futures Trading Commission, which argues it has exclusive control over prediction markets and is pursuing legal efforts to prevent state intervention.
“Coinbase will persist in advocating for federal governance of these markets as intended by Congress,” stated Paul Grewal, Chief Legal Officer of Coinbase, in response to the lawsuit.
The CFTC contends that federal regulation is essential to safeguard market participants from “overreaching state regulators.”
A recent federal appeals court sided with Kalshi, determining that the CFTC possesses exclusive oversight over certain event contracts, while various legal disputes involving prediction market operators and state regulators, including those in New York, continue to unfold.