In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings, which encompass sports, entertainment, and elections, are in contravention of state gambling laws. According to the lawsuit, these platforms are essentially providing unlicensed gambling products, as evidenced by their marketing strategies and the role they play as bookmakers. Furthermore, the lawsuit highlights that these 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 lawsuit asserts that the behavior of these platforms is quintessentially gambling, allowing users to stake money on the outcome of events beyond their control.
This development is the latest in a series of lawsuits filed by states such as Nevada and Washington, arguing that such bets are indeed a form of gambling and not federally regulated swaps. 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 stated that prediction markets fall under federal regulation and the company will fight for federal oversight.
Gemini declined to comment. The Commodity Futures Trading Commission Chairman has also weighed in, arguing that prediction markets fall under his agency's jurisdiction. Kalshi, a major prediction market provider, was not named in the lawsuit but has previously sued 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 described the products offered by Gemini and Coinbase as 'illegal gambling operations,' emphasizing that gambling by any other name remains subject to regulation under state laws and the Constitution.