In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their predictive market products are essentially unlicensed gambling offerings. According to the lawsuit, these platforms have been promoting their predictive markets and acting as bookmakers, which is against state regulations. The NYAG's office has described the behavior of these platforms as gambling, referring to users as 'bettors' and stating that each contract is essentially a bet. Furthermore, the lawsuit argues that these platforms allow individuals between the ages of 18 and 21 to place bets, which is prohibited in New York for those under 21 using mobile apps.
The lawsuit claims that what these platforms offer is 'quintessentially gambling,' allowing users to stake money on the outcome of events beyond their control. This is not an isolated case, as other states such as Nevada and Washington have also taken similar action against predictive market providers, arguing that their sports-related products constitute gambling rather than federally regulated swaps. The issue is currently being deliberated in 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 predictive markets are federally regulated national exchanges and that the company will fight for federal oversight. Gemini declined to comment on the matter.
The Commodity Futures Trading Commission Chairman, Mike Selig, has also weighed in, arguing that predictive markets fall under his agency's exclusive jurisdiction. The CFTC has taken action against several states to block charges against predictive market providers. Another major predictive market provider, Kalshi, was not named in the lawsuit but had previously taken preemptive action against the New York State Gaming Commission. New York State Attorney General Letitia James has described both Gemini and Coinbase's products as 'illegal gambling operations,' stating that 'gambling by another name is still gambling' and is subject to state laws and regulations.