In a recent lawsuit, New York has filed a case against Coinbase and Gemini, alleging that their predictive market offerings constitute unlicensed gambling products. The lawsuit claims that these platforms have been promoting their predictive markets and acting as bookmakers, which is against state laws. Furthermore, the lawsuit highlights that the platforms permit individuals between the ages of 18 and 21 to place bets, which is in direct contravention of New York's laws that prohibit anyone under 21 from engaging in mobile app gambling.
The NYAG's office has described the behavior of these predictive market platforms as quintessentially gambling, where users stake money on the outcome of events outside of their control. This lawsuit is part of a larger trend, with states such as Nevada and Washington also taking legal action against predictive market providers. The issue is currently being debated in multiple appeals courts and is likely to be heard by the U.S. Supreme Court.
In response to the lawsuit, Coinbase's Chief Legal Officer has stated that predictive markets are federally regulated national exchanges and that the company will fight for federal oversight. Gemini has declined to comment on the matter. The Commodity Futures Trading Commission Chairman has argued that predictive markets, including those related to sports, fall under the agency's exclusive jurisdiction.
Kalshi, a major predictive market provider, was not named in the lawsuit but has previously taken 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 both Gemini and Coinbase's products are 'illegal gambling operations' and that 'gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.'