In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their predictive market offerings constitute unlicensed gambling products. The lawsuit asserts that these platforms facilitate betting on sports, entertainment, and election outcomes, thereby violating state gambling regulations. According to the New York Attorney General's office, the predictive markets operated by Coinbase and Gemini are essentially gambling platforms, where users can place bets and potentially receive rewards. The lawsuit also highlights the fact that these platforms allow individuals between the ages of 18 and 21 to participate, despite New York's ban on mobile app gambling for those under 21.
The case against Coinbase argues that the platform's offerings meet the definition of gambling, as they involve staking money on the outcome of events beyond the bettor's control. This development is part of a broader trend, with states like Nevada and Washington having previously taken legal action against predictive market providers. The issue is currently being considered by multiple appeals courts and may eventually be heard by the US Supreme Court. In response to the lawsuit, Coinbase's Chief Legal Officer, Paul Grewal, stated that predictive markets are federally regulated national exchanges and that the company would advocate for federal oversight.
Gemini declined to comment on the matter. The Commodity Futures Trading Commission Chairman, Mike Selig, has also weighed in, arguing that predictive markets fall under the agency's exclusive jurisdiction. The CFTC has filed lawsuits to block charges against predictive market providers in several states. Kalshi, a major predictive market provider, was not named in the lawsuit, having previously 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 described the products offered by Gemini and Coinbase as 'illegal gambling operations,' emphasizing that gambling, regardless of its form, is subject to regulation under state laws and the Constitution.