In a lawsuit filed on Tuesday, New York targeted Coinbase and Gemini, arguing that their prediction market offerings constitute unlicensed gambling products. According to the lawsuit, these platforms have been operating as bookmakers, with users essentially placing bets on various outcomes, including sports and entertainment events. The lawsuit also highlights the platforms' alleged failure to adhere to New York's age restrictions, allowing individuals between 18 and 21 to participate in gambling activities, which is prohibited in the state.
The New York Attorney General's office has described the platforms' activities as 'quintessentially gambling,' where users stake money on the outcome of events beyond their control. This lawsuit is part of a broader trend, with other states like Nevada and Washington having already taken similar 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 and has vowed to fight for federal oversight. Gemini, on the other hand, has declined to comment on the matter.
The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its jurisdiction. Meanwhile, Kalshi, a major prediction market provider, was not named in the lawsuit but has previously taken preemptive legal action against the New York State Gaming Commission, seeking a ruling that state gambling laws do not apply to its platform. New York State Attorney General Letitia James has stated that both Gemini and Coinbase's products are 'illegal gambling operations' that are not exempt from state laws and regulations.