In a recent lawsuit, New York has taken action against Coinbase and Gemini, asserting that their predictive market offerings, which encompass sports, entertainment, and election predictions, are in violation of state laws regulating gambling. The lawsuit alleges that these offerings are essentially unlicensed gambling products, as evidenced by the companies' advertising strategies and their role as bookmakers on the platforms.
Furthermore, the lawsuit highlights 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 characterized the behavior of these predictive market platforms as facilitating betting, with users being referred to as 'bettors' and each contract being deemed a 'bet.' 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 decided by the U.S. Supreme Court. In response, Coinbase's Chief Legal Officer, Paul Grewal, has stated that predictive markets are federally regulated national exchanges and that the company will advocate for federal oversight.
A spokesperson for Gemini declined to comment. The Commodity Futures Trading Commission Chairman, Mike Selig, has also weighed in, arguing that predictive markets fall under the agency's exclusive jurisdiction.
Meanwhile, Kalshi, a major predictive market provider, was not named as a defendant and has preemptively sued 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 the products offered by Gemini and Coinbase are 'illegal gambling operations,' emphasizing that 'gambling by another name is still gambling' and is subject to regulation under state laws and the Constitution.