In a recent lawsuit, New York targeted Coinbase and Gemini, asserting that their prediction market products, which cover sports, entertainment, and elections, are essentially unlicensed gambling products. The lawsuit highlights how these companies advertise their prediction markets and act as bookmakers, further emphasizing their role in facilitating gambling activities.
Additionally, the suit points out that these platforms allow individuals between the ages of 18 and 21 to place bets, which contradicts New York's law prohibiting anyone under 21 from participating in mobile gambling apps. The New York Attorney General's office described the behavior of these platforms as quintessentially gambling, where users stake money on outcomes beyond their control, expecting to receive something of value based on the outcome. This lawsuit is part of a broader trend, with states like Nevada and Washington also taking legal action against prediction market providers, arguing that their sports-related products constitute gambling rather than federally regulated swaps. The issue is currently before multiple appeals courts and is likely to be heard by the U.S.
Supreme Court. In response, Coinbase's Chief Legal Officer emphasized that prediction markets are federally regulated and the company will advocate for federal oversight. Gemini declined to comment on the matter. The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its jurisdiction, and has taken legal action to block charges against prediction market providers in several states.
Another major prediction market provider, Kalshi, was not named in the lawsuit but has its own ongoing legal case, seeking a federal ruling that its platform is not subject to state gambling laws.