In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. According to the lawsuit, these platforms have been advertising their prediction markets and acting as bookmakers, which is deemed to be in violation of state laws. The New York Attorney General's office has pointed out that users of these platforms are essentially 'bettors' and that each contract is, in fact, a bet.
Furthermore, the lawsuit highlights that these platforms allow 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 lawsuit against Coinbase explicitly states that the company's offerings are 'quintessentially gambling,' allowing users to stake money on the outcome of events beyond their control.
This lawsuit is the latest in a series of actions taken by states, including Nevada and Washington, 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's Chief Legal Officer has argued that prediction markets are federally regulated and has vowed to fight for federal oversight.
Gemini 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 and has preemptively sued the New York State Gaming Commission. New York State Attorney General Letitia James has stated that both Gemini and Coinbase's products are 'illegal gambling operations,' emphasizing that gambling by any other name is still subject to regulation under state laws and the Constitution.