In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. The state argues that these platforms facilitate betting on sports, entertainment, and elections, which contravenes state gambling regulations. According to the lawsuit, the companies' advertising strategies and their role as bookmakers on the platforms demonstrate the gambling nature of their prediction markets. Furthermore, the platforms allegedly allow individuals between 18 and 21 years old to place bets, which is prohibited in New York for those under 21 using mobile apps.
The lawsuit describes the prediction market platforms as essentially gambling operations, where users stake money on the outcome of events beyond their control. This development is part of a broader trend, with states like Nevada and Washington also taking legal action against prediction market providers. The issue is currently pending before multiple appeals courts and may eventually be heard by the U.S.
Supreme Court. In response, Coinbase's Chief Legal Officer, Paul Grewal, has asserted that prediction markets are federally regulated national exchanges and that the company will advocate for federal oversight.
Gemini, on the other hand, has declined to comment. The Commodity Futures Trading Commission Chairman, Mike Selig, has expressed the view that prediction markets fall under the agency's exclusive jurisdiction. Meanwhile, Kalshi, a major prediction market provider, was not named in the lawsuit and is currently involved in a separate legal case seeking a federal court 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 gambling, regardless of its form, is subject to state laws and regulations.