In a recent lawsuit, New York has taken action against Coinbase and Gemini, contending that their predictive market offerings, which encompass sports, entertainment, and elections, are in violation of state gambling laws. The lawsuits allege that these offerings are essentially unlicensed gambling products, pointing to the manner in which the companies have advertised their predictive markets and their role as bookmakers. Furthermore, the NYAG's office has described the behavior of these platforms, referring to users as 'bettors' and emphasizing that each contract constitutes a bet. The suits also highlight that these platforms allow individuals between the ages of 18 and 21 to place bets, which is in contravention of New York's laws that prohibit anyone under 21 from gambling on mobile apps.
The case against Coinbase asserts that the platform's offerings are quintessentially gambling, allowing bettors to stake money on the outcome of events not under their control, with the understanding that they will receive something of value based on the outcome. This lawsuit is the latest in a series of actions taken by states, including Nevada and Washington, against predictive market providers over their sports and entertainment products, with the issue likely to be deliberated 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. Conversely, Gemini has declined to comment on the matter.
The Commodity Futures Trading Commission Chairman has also weighed in, arguing that prediction markets fall under the agency's jurisdiction, and the CFTC has taken legal action to block charges against prediction market providers in several states. Another major prediction market provider, Kalshi, was not named in the lawsuit but has previously taken preemptive legal action against the New York State Gaming Commission.
New York State Attorney General Letitia James has characterized 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.