In a recent lawsuit, New York has targeted Coinbase and Gemini, asserting that their predictive market offerings constitute unlicensed gambling products. The lawsuit highlights how these companies have advertised their predictive markets and acted as bookmakers, essentially allowing users to place bets. Furthermore, it is alleged that the platforms enable individuals between the ages of 18 and 21 to participate, despite New York's prohibition on gambling for those under 21 via mobile apps.
The lawsuit describes the behavior of these platforms as 'quintessentially gambling,' where users stake money on the outcome of events beyond their control. This legal action is part of a broader trend, with states like Nevada and Washington also pursuing similar lawsuits against predictive market providers, arguing that their sports-related products are indeed a form of betting. The issue is now pending before multiple appeals courts and is likely to be reviewed by the U.S.
Supreme Court. In response, Coinbase's Chief Legal Officer has stated that predictive markets are federally regulated and the company will advocate for federal oversight. Meanwhile, Gemini has declined to comment on the matter. The Commodity Futures Trading Commission has also weighed in, asserting its jurisdiction over predictive markets, including those related to sports.
This development is part of an ongoing legal debate regarding the regulation of predictive markets and their classification as either gambling operations or federally regulated exchanges.