New York Files Lawsuits Against Coinbase and Gemini Over Prediction Markets, Seeks $3.4 Billion

New York State has filed lawsuits against Coinbase and Gemini, alleging the crypto platforms violated state gambling laws by offering prediction markets, according to CoinDesk. The cases were filed Tuesday in Manhattan state court and cover event betting tied to sports as well as markets linked to entertainment and politics. Attorney General Letitia James said the products amount to illegal gambling under New York law and objected to the platforms allowing 18-year-olds in the state to place bets, even though the legal gambling age is 21. "A change in form but not in substance is still gambling," James said, adding that the "so-called prediction markets" expose young people to addictive platforms without adequate regulatory safeguards. New York is seeking at least $2.2 billion in damages from Coinbase and at least $1.2 billion from Gemini. Other states have also pursued prediction-market operators over alleged violations of gambling statutes. Industry participants have argued that event contracts fall under federal oversight by the U.S. Commodity Futures Trading Commission (CFTC), not state law. New York's move is drawing attention given its role in financial regulation and its civil forfeiture laws, which can allow the state to seize revenues it claims are ill-gotten gains, even if generated outside New York. After the filings, Coinbase Chief Legal Officer Paul Grewal said the company "will continue to advocate for the federal regulatory framework for [derivatives] markets envisioned by Congress." Coinbase pointed to Grewal's post on X when asked for comment. The attorney general's office is also in a separate dispute with Kalshi, the largest U.S. prediction-market platform. Kalshi last fall asked a U.S. district court in New York to block the state from suing it over alleged gambling-law violations; that motion has not been decided. New York issued Kalshi a cease-and-desist order in October, and a lawsuit could follow if Kalshi's bid is rejected. Legal observers generally expect the question of state versus federal jurisdiction over prediction markets to end up before the U.S. Supreme Court. Gemini did not immediately respond to a request for comment. A spokesperson for the New York attorney general's office referred Decrypt to James's statement and the court filings. Editor's note: This article was updated after publication with additional details and a response from Coinbase.