In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. The lawsuit claims that these platforms have been advertising their prediction markets and acting as bookmakers, which is deemed to be in contravention of state regulations.
Furthermore, it is argued that the platforms permit individuals between the ages of 18 and 21 to place bets, despite New York's prohibition on gambling for those under 21 on mobile apps. The New York Attorney General's office has characterized the behavior of these prediction market platforms as essentially gambling, where users stake money on the outcome of events beyond their control. This lawsuit is part of a broader trend, with states such as Nevada and Washington also taking legal action against prediction market providers. The issue is currently before multiple appeals courts and is likely to be heard by the U.S.
Supreme Court. In response, Coinbase has asserted that prediction markets are federally regulated national exchanges and will fight for federal oversight, while Gemini has declined to comment. The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its exclusive jurisdiction. Kalshi, a major prediction market provider, was not named in the lawsuit but has previously taken preemptive action against the New York State Gaming Commission.
New York State Attorney General Letitia James has stated that the products offered by Gemini and Coinbase are 'illegal gambling operations,' emphasizing that gambling by any other name remains subject to regulation under state laws and the Constitution.