In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. The lawsuit claims that these platforms have been advertising their prediction markets and acting as bookmakers, which is deemed to be in violation of state laws. Furthermore, the suit argues that the platforms permit individuals between the ages of 18 and 21 to place bets, despite New York's prohibition on gambling for those under 21 on mobile apps.
The NYAG's office has described the behavior of these platforms as essentially 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, with the issue likely to be decided by the U.S. Supreme Court. Coinbase has stated its intention to fight for federal oversight, while Gemini has declined to comment.
The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its jurisdiction. Kalshi, a major prediction market provider, was not named in the lawsuit but has previously sued the New York State Gaming Commission to establish that state gambling laws do not apply to its platform.