On Tuesday, New York initiated a lawsuit against Coinbase and Gemini, thereby joining the list of states arguing that prediction market contracts involving sports, entertainment, and elections contravene state laws on gambling. The lawsuits contend that the prediction market offerings of Coinbase and Gemini are essentially unlicensed gambling products, highlighting the manner in which these companies advertised their prediction markets and their role as bookmakers.
Furthermore, the NYAG's office described the actual behavior of the prediction market platforms, referring to users as 'bettors' and stating that 'each contract is a bet.' The suits also pointed out that the platforms permit individuals between the ages of 18 and 21 to place bets, which is in direct contravention of New York's ban on gambling for individuals under 21 on mobile apps. The lawsuit against Coinbase stated, 'As described above, what Respondent offers through its platform is quintessentially gambling: It allows a bettor to stake or risk money upon the outcome of a contest of chance or a future contingent event not under the bettor’s control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome.' New York is the latest state to take legal action against providers of prediction markets over their sports and entertainment products, following in the footsteps of states such as Nevada and Washington. This issue is currently before multiple appeals courts and is likely to be heard by the U.S.
Supreme Court. In response, Coinbase Chief Legal Officer Paul Grewal posted on X that 'prediction markets are federally regulated national exchanges' and that Coinbase would advocate for federal oversight. A Gemini spokesperson declined to comment. Commodity Futures Trading Commission Chairman Mike Selig has argued that prediction markets, including sports-related contracts, fall under the exclusive jurisdiction of his agency.
The CFTC has filed lawsuits against several states to prevent them from taking action against prediction market providers. Kalshi, a major prediction market provider, was not named as a defendant and had previously sued the New York State Gaming Commission. New York State Attorney General Letitia James stated that the products offered by Gemini and Coinbase are 'illegal gambling operations,' adding that 'gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.'