In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their predictive market offerings constitute unlicensed gambling products. According to the lawsuit, these platforms have been advertised and operated in a manner akin to traditional bookmaking, with users essentially placing bets on various outcomes. Furthermore, the lawsuit highlights that these platforms allow individuals between the ages of 18 and 21 to participate, which is in direct violation of New York's laws prohibiting gambling for those under 21 on mobile apps.
The New York Attorney General's office has described the predictive market platforms as facilitating bets, with each contract essentially serving as a wager. This development is the latest in a series of lawsuits filed by states against predictive market providers, with other states such as Nevada and Washington also taking similar action. The issue is currently being deliberated in multiple appeals courts and is likely headed for the U.S. Supreme Court.
In response, Coinbase has asserted that predictive markets fall under federal regulation and has vowed 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 predictive markets, including those related to sports, fall under its jurisdiction. The CFTC has taken action to block charges against predictive market providers in several states and has filed to join a case in Nevada to defend these providers.
Another major predictive market provider, Kalshi, was not named in the lawsuit but has previously taken preemptive legal action 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 the products offered by Gemini and Coinbase constitute 'illegal gambling operations,' emphasizing that gambling, regardless of its form, is subject to regulation under state laws and the Constitution.