New York AG Sues Coinbase and Gemini, Alleges Unlicensed Gambling via Prediction Markets

New York Attorney General Letitia James filed suit against Coinbase and Gemini on April 21, alleging the exchanges operated illegal gambling through their "prediction market" products. According to the Attorney General's Office, an investigation concluded that the two firms' prediction markets amount to unlicensed gambling under New York law. The complaint seeks penalties, disgorgement of allegedly unlawful proceeds, and restitution for affected customers. James said that rebranding does not change the nature of the activity, arguing that "gambling by another name is still gambling" and remains subject to state law and the New York Constitution. She also criticized an "1821" age gate, saying it could allow underage access and warning that online gambling exposure can harm young people's mental and financial wellbeing. The Attorney General also alleged Coinbase and Gemini did not obtain licenses from the New York State Gaming Commission, suggesting the lack of licensing may have been intended to avoid tax obligations. Coinbase Chief Legal Officer Paul Grewal rejected the allegations and said the company would contest the claims. Coinbase and Gemini launched their betting-style prediction platforms amid heightened interest in prediction markets during the 2024 U.S. presidential election. Both products went live in mid-December 2025 and now operate across all 50 U.S. states. As the two exchanges face scrutiny in New York, competitor Polymarket has moved forward with plans to introduce a native stablecoin. The brief also notes that Polymarket and Kalshi faced bans in 2022 and 2025, respectively, though operations are described as normal now.