In a recent lawsuit, New York has taken action against Coinbase and Gemini, arguing that their prediction market products, which involve sports, entertainment, and elections, are in breach of state gambling regulations. The lawsuit claims that these platforms are essentially providing unlicensed gambling products, with the companies acting as bookmakers and users being referred to as 'bettors'.
Additionally, the platforms allow individuals between the ages of 18 and 21 to place bets, which is prohibited in New York for those under 21 using mobile apps. The lawsuit describes the prediction market platforms as 'quintessentially gambling', where users 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 being considered by multiple appeals courts and may ultimately be decided by the U.S.
Supreme Court. Coinbase has stated that it will fight for federal oversight, arguing that prediction markets are federally regulated national exchanges. Gemini declined to comment on the matter.
The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its exclusive jurisdiction. Another prediction market provider, Kalshi, was not named in the lawsuit and is currently awaiting a federal court ruling on whether state gambling laws apply to its platform. New York State Attorney General Letitia James has stated that the products offered by Gemini and Coinbase are 'illegal gambling operations' that are not exempt from regulation under state laws and the Constitution.