In a lawsuit filed on Tuesday, New York alleged that Coinbase and Gemini's prediction market offerings constitute unlicensed gambling products. According to the lawsuit, these platforms allow users to place bets on various events, including sports and entertainment, which is deemed a violation of state laws. The lawsuit highlights that the platforms permit individuals between the ages of 18 and 21 to participate, despite New York's prohibition on gambling for those under 21.
The state argues that the prediction market offerings are, in essence, a form of gambling where users stake money on the outcome of events beyond their control. This lawsuit is the latest in a series of actions taken by states, including Nevada and Washington, against prediction market providers. The issue is currently being reviewed by multiple appeals courts and may eventually be heard by the U.S. Supreme Court.
In response, Coinbase's Chief Legal Officer, Paul Grewal, stated 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, asserting that prediction markets fall under its jurisdiction. New York State Attorney General Letitia James described the products offered by Gemini and Coinbase as 'illegal gambling operations,' emphasizing that gambling, regardless of its form, is subject to regulation under state laws and the Constitution.