In a recent development, New York has filed lawsuits against both Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. According to the lawsuits, the manner in which these companies advertise their prediction markets and operate as bookmakers on their platforms is indicative of gambling activities.
Furthermore, the suits highlight that these platforms allow individuals between the ages of 18 and 21 to place bets, which is in direct contravention of New York's laws prohibiting anyone under the age of 21 from engaging in mobile app gambling. The New York Attorney General's office has explicitly described the behavior of these prediction market platforms as facilitating betting, with users being referred to as "bettors" and each contract being deemed a "bet." This legal action is part of a broader trend, with states such as Nevada and Washington also taking similar steps against prediction market providers, arguing that their sports-related products are, in fact, bets rather than federally regulated swaps.
The issue is currently before multiple appeals courts and is likely to be heard by the U.S. Supreme Court. In response, Coinbase's Chief Legal Officer, Paul Grewal, has stated that prediction markets are subject to federal regulation and oversight, and the company will defend its position. Gemini, on the other hand, has declined to comment on the matter.
The Commodity Futures Trading Commission Chairman, Mike Selig, has asserted that prediction markets fall under the agency's exclusive 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 lawsuits 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.