In a lawsuit filed on Tuesday, New York targeted Coinbase and Gemini, arguing that their predictive market offerings, which include sports, entertainment, and election-related contracts, are essentially unlicensed gambling products. The lawsuits highlight how the companies promoted their predictive markets and acted as bookmakers, with the New York Attorney General's office describing user interactions as betting and each contract as a wager. Additionally, the suits contend that the platforms allow individuals between 18 and 21 to place bets, which is prohibited in New York for those under 21 using mobile apps. The case is part of a broader dispute, with other states like Nevada and Washington also taking legal action against predictive market providers, arguing that such bets are not federally regulated swaps but rather gambling.
This issue is currently before multiple appeals courts and may ultimately be decided by the U.S. Supreme Court. In response, Coinbase's Chief Legal Officer Paul Grewal stated that predictive markets are federally regulated national exchanges and that the company will advocate for federal oversight. Gemini declined to comment.
The Commodity Futures Trading Commission Chairman, Mike Selig, has asserted that predictive markets fall under his agency's exclusive jurisdiction, and the CFTC has taken legal action to block charges against predictive market providers in several states. Kalshi, a major predictive market provider, was not named in the lawsuit but had previously sued the New York State Gaming Commission, seeking a federal court ruling that state gambling laws do not apply to its platform. New York State Attorney General Letitia James described both Gemini and Coinbase's products as 'illegal gambling operations,' emphasizing that gambling by any other name remains subject to regulation under state laws and the Constitution.