New York Targets Coinbase and Gemini in Lawsuit Over Prediction Markets

New York filed lawsuits Tuesday against Coinbase and Gemini, arguing that the companies' prediction market contracts tied to sports, entertainment and elections violate state gambling laws. In the complaints, the New York Attorney General's office contends the products function as unlicensed gambling, citing the way the platforms were marketed and the firms' roles as de facto bookmakers. The filings describe users as "bettors" and state that "each contract is a bet." State regulators also pointed to age restrictions, alleging the platforms enable wagering by users between 18 and 21 even though New York prohibits anyone under 21 from gambling via mobile apps. One filing says the offering is "quintessentially gambling," asserting it allows a participant to risk money on the outcome of a chance event or future contingent event outside the participant's control in exchange for something of value if a specified outcome occurs. New York joins Nevada, Washington and other states that have moved against prediction market providers over sports and entertainment contracts. The disputes center on whether these products are traditional bets governed by state law or federally regulated swaps. The issue is now before multiple appeals courts and could ultimately reach the U.S. Supreme Court. Coinbase Chief Legal Officer Paul Grewal wrote on X (formerly Twitter) that "prediction markets are federally regulated national exchanges" and said Coinbase would push for federal oversight. Commodity Futures Trading Commission Chairman Mike Selig has said prediction markets, including sports-related contracts, fall within the agency's "exclusive jurisdiction." The CFTC has sued Arizona, Connecticut and Illinois to block them from pursuing actions against prediction market providers, and it has sought to join a Nevada case to defend the firms. Kalshi, one of the largest prediction market operators, was not named in Tuesday's filings. The company sued the New York State Gaming Commission last fall, asking a federal court to declare that state gambling laws do not apply to its platform. That case remains pending in the U.S. District Court for the Southern District of New York. New York Attorney General Letitia James said in a statement that both Gemini's and Coinbase's offerings were "illegal gambling operations." "Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution," she said.