The state of New York has filed lawsuits against Coinbase and Gemini, alleging that their predictive market offerings constitute unlicensed gambling products. According to the lawsuits, these platforms have been advertising their predictive markets and acting as bookmakers, which is deemed illegal. The New York Attorney General's office has described the behavior of these platforms as gambling, with users being referred to as 'bettors' and each contract being considered a 'bet'.
Furthermore, the platforms have been accused of allowing individuals between the ages of 18 and 21 to place bets, which is prohibited in New York. The lawsuits argue that the predictive market contracts are, in essence, bets on the outcome of events beyond the control of the bettor, which is a clear violation of state gambling laws.
This development is part of a broader trend, with other states such as Nevada and Washington also taking legal action against predictive market providers. The issue is currently before multiple appeals courts and is likely to be heard by the US Supreme Court. In response, Coinbase's Chief Legal Officer has stated that predictive markets are federally regulated and the company will fight for federal oversight. Gemini has declined to comment on the matter.
The Commodity Futures Trading Commission has also weighed in, arguing that predictive markets fall under its jurisdiction. Another predictive market provider, Kalshi, has preemptively 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 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'.