In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings, which include sports, entertainment, and election-related contracts, are essentially unlicensed gambling products. The lawsuit highlights how these companies have advertised their prediction markets and their role as bookmakers, further emphasizing the gambling nature of these products.
It also points out that the platforms allow individuals between 18 and 21 to place bets, which contradicts New York's law that prohibits gambling on mobile apps for those under 21. New York's lawsuit is part of a broader trend, with states like Nevada and Washington also taking legal action against prediction market providers, arguing that these offerings constitute gambling rather than federally regulated swaps. The issue is currently being deliberated in multiple appeals courts and is likely to be reviewed by the U.S. Supreme Court.
In response, Coinbase has asserted that prediction markets are under federal regulation and has expressed its intention to fight for federal oversight. Gemini, on the other hand, has declined to comment on the matter. The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its jurisdiction.
This development comes as Kalshi, a major prediction market provider, was not named in the lawsuit but is engaged in its own legal battle with the New York State Gaming Commission, seeking a ruling that its platform is not subject to state gambling laws.