New York Attorney General Letitia James has initiated legal action against Coinbase Financial Markets and Gemini Titan, asserting that their prediction market platforms operate as illegal gambling under state regulations.
The lawsuits contend that both companies neglected to secure the necessary licenses from the New York State Gaming Commission while allowing users to place bets on various events, including sports, elections, and entertainment.
According to James, the event contracts offered by these companies fit the legal criteria for gambling since the outcomes are determined by chance and are beyond the bettors' control.
Additionally, the lawsuits allege that the platforms permitted users aged 18 to 20 to engage in betting, despite the state law mandating a minimum age of 21 for mobile sports wagering.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” stated Attorney General James.
She emphasized that “the prediction markets of Gemini and Coinbase are merely illegal gambling operations, putting young individuals at risk on platforms that lack essential safeguards. My office is taking measures to protect New Yorkers and prevent these platforms from breaching the law.”
The state aims to recover illicit profits, impose civil penalties that could reach three times those profits, and provide restitution to affected customers. Furthermore, it seeks a court order to prohibit wagering by individuals under 21 and to limit marketing efforts on college campuses. The lawsuits also highlight violations concerning betting on games featuring New York college teams.
Since the 2024 U.S. presidential election, prediction markets have gained significant traction, particularly after accurately predicting Donald Trump's victory over Kamala Harris.
Coinbase and Gemini introduced their prediction market services in mid-December and operate them nationwide across all 50 states, as indicated in court documents.
This legal action occurs amid a larger jurisdictional conflict between state regulators and the Commodity Futures Trading Commission (CFTC), which asserts exclusive authority over prediction markets and has taken legal steps to prevent state regulation.
“Coinbase will persist in advocating for federal oversight of these markets as intended by Congress,” remarked Coinbase Chief Legal Officer Paul Grewal in response to the lawsuit.
The CFTC has maintained that federal oversight is essential to shield market participants from overly aggressive state regulators.
A recent federal appeals court ruling favored Kalshi, confirming that the CFTC has exclusive authority over certain event contracts, while ongoing legal disputes involving prediction market operators and state regulators, including New York, continue to unfold.