In a recent lawsuit, the state of New York has accused Coinbase and Gemini of operating unlicensed gambling products through their prediction market offerings. According to the lawsuit, the companies' advertising and role as bookmakers on the platforms demonstrate that these offerings are essentially gambling products. 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. The state argues that the prediction market contracts are, in fact, bets and not federally regulated swaps.
This issue has been taken up by multiple states, including Nevada and Washington, and is likely to be heard by the U.S. Supreme Court. Coinbase has stated that it will fight for federal oversight, citing 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. 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.'