In a recent lawsuit, New York has sued Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. The lawsuit claims that these platforms have been operating in violation of state laws, allowing users to place bets on sports, entertainment, and elections. According to the NYAG's office, the platforms' prediction markets are essentially gambling operations, where users can stake money on the outcome of events beyond their control.
The lawsuit also highlights that the platforms allow individuals between the ages of 18 and 21 to place bets, which is prohibited in New York. This lawsuit is the latest in a series of actions taken by states against prediction market providers, with Nevada, Washington, and others having filed similar suits. The issue is currently being considered by multiple appeals courts and is likely to be heard by the U.S.
Supreme Court. In response to the lawsuit, Coinbase's Chief Legal Officer Paul Grewal stated that prediction markets are federally regulated national exchanges and that the company would fight for federal oversight.
Gemini declined to comment on the matter. The Commodity Futures Trading Commission Chairman has argued that prediction markets fall under the agency's exclusive jurisdiction, and the CFTC has filed suits to block charges against prediction market providers. Kalshi, a major prediction market provider, was not named as a defendant in the lawsuit, having preemptively sued the New York State Gaming Commission last fall.
New York State Attorney General Letitia James stated that both Gemini and Coinbase's products are 'illegal gambling operations' and that 'gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.'