On Tuesday, New York filed lawsuits against both Coinbase and Gemini, contending that their predictive market products are essentially unlicensed gambling operations. The lawsuits highlight how these companies advertise their predictive markets and act as bookmakers, which the state argues is a clear violation of gambling laws.
Furthermore, the state points out 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. The NYAG's office emphasizes that the behavior of these platforms, where users are referred to as "bettors" and each contract is deemed a "bet," further supports the claim that they are engaging in gambling activities.
New York is not alone in this stance, as other states such as Nevada and Washington have also taken legal action against predictive market providers, arguing that their sports and entertainment-related products constitute gambling and not federally regulated swaps. This 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, Paul Grewal, stated that predictive markets are under federal regulation and the company will advocate for federal oversight.
Gemini, on the other hand, declined to comment. The Commodity Futures Trading Commission Chairman, Mike Selig, has also weighed in, asserting that predictive markets, including those related to sports, fall under the agency's jurisdiction.
Meanwhile, Kalshi, a major predictive market provider, was not named in the lawsuit but has its own ongoing case against the New York State Gaming Commission, seeking a ruling that state gambling laws do not apply to its platform. New York State Attorney General Letitia James has stated that both Gemini and Coinbase's products are "illegal gambling operations," emphasizing that regardless of the terminology used, gambling is subject to regulation under state laws and the Constitution.