In a recent lawsuit, New York has targeted Coinbase and Gemini, asserting that their predictive market offerings constitute unlicensed gambling products. The lawsuit highlights how these platforms advertise their predictive markets and function as bookmakers, effectively allowing users to place bets. Furthermore, it notes that individuals between the ages of 18 and 21 are permitted to participate, despite New York's prohibition on gambling for those under 21. The state's argument is that these platforms facilitate gambling by allowing users to stake money on the outcome of events beyond their control, with the understanding that they will receive something of value based on the outcome.
This legal action is part of a broader trend, with states like Nevada and Washington also taking similar steps against predictive market providers. The issue is likely to be decided by the U.S.
Supreme Court, as it currently stands before multiple appeals courts. Coinbase has stated its intention to fight for federal oversight, arguing that predictive markets are federally regulated national exchanges. Conversely, the Commodity Futures Trading Commission maintains that predictive markets fall under its exclusive jurisdiction. Meanwhile, Kalshi, a major predictive market provider, was not named in the lawsuit but has preemptively sued the New York State Gaming Commission to establish that state gambling laws do not apply to its platform.
New York State Attorney General Letitia James has emphasized that these products are 'illegal gambling operations' and that 'gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.'