In a lawsuit filed on Tuesday, New York targeted Coinbase and Gemini, asserting that their predictive market offerings constitute unlicensed gambling products. The lawsuits highlight how these companies advertised their predictive markets and functioned as bookmakers, with the New York Attorney General's office characterizing user interactions as betting activities.
Furthermore, the suits point out that these platforms enable individuals between the ages of 18 and 21 to place bets, despite New York's prohibition on gambling for those under 21 via mobile apps. The lawsuit against Coinbase emphasizes that the platform's offerings are essentially gambling, as they allow users to stake money on the outcome of events beyond their control, with the understanding that they will receive something of value based on the outcome. This legal action follows similar suits filed by other states, including Nevada and Washington, which contend that such predictive market products, particularly those related to sports, are indeed 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, stated that predictive markets are federally regulated national exchanges and that the company will advocate for federal oversight. Gemini declined to comment on the matter.
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 in the lawsuit but had previously 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 described 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.