New York sues Coinbase, Gemini over prediction markets, calls them illegal gambling

New York Attorney General Letitia James has filed lawsuits against Coinbase Financial Markets and Gemini Titan, alleging their prediction market platforms constitute illegal gambling operations under state law.

The lawsuits claim the companies failed to obtain licenses from the New York State Gaming Commission while offering users the ability to bet on outcomes of events such as sports, elections, and entertainment.

James said the companies’ so-called event contracts meet the legal definition of gambling because outcomes are outside bettors’ control or depend on chance.

Authorities also allege the platforms allowed users aged 18 to 20 to participate, despite the state’s minimum age of 21 for mobile sports betting.

“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” Attorney General James said.

She added that “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails. My office is taking action to protect New Yorkers and stop these platforms from violating the law.”

James said the state is seeking to recover illegal profits, impose civil fines of up to three times those profits, and secure restitution for affected customers. It is also asking the court to ban under-21 wagering and restrict marketing on college campuses. The lawsuits further allege violations related to betting on games involving New York college teams.

Prediction markets have surged in popularity since the 2024 U.S. presidential election, when such platforms drew attention for accurately forecasting the victory of Donald Trump over Kamala Harris.

Coinbase and Gemini launched their prediction market offerings in mid-December and operate them across all 50 U.S. states, according to court filings.

The cases come amid a broader jurisdictional dispute between state regulators and the Commodity Futures Trading Commission, which claims exclusive authority over prediction markets and has taken legal action to block state oversight.

“Coinbase will continue to fight for the federal oversight of these markets that Congress intended,” Coinbase Chief Legal Officer Paul Grewal said in response to the lawsuit.

The CFTC has argued that federal oversight is needed to protect market participants from “overzealous state regulators.”

A federal appeals court recently sided with Kalshi in finding the CFTC has exclusive oversight of certain event contracts, while separate legal challenges involving prediction market operators and state regulators, including New York, remain ongoing.