In a recent lawsuit, New York has targeted Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. According to the lawsuit, the way these companies advertise their prediction markets and act as bookmakers on their platforms suggests that they are indeed facilitating gambling.
The lawsuit also highlights that these platforms allow users between the ages of 18 and 21 to place bets, which is prohibited in New York for anyone under 21 using mobile apps. The state's argument is that these prediction markets are essentially gambling, where users stake money on the outcome of events beyond their control, with the understanding that they will receive something of value if certain outcomes occur.
This lawsuit is part of a broader trend, with states like Nevada and Washington also taking legal action against prediction market providers, arguing that their sports-related products are gambling and not 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 has stated that prediction markets are federally regulated and will fight for federal oversight, while Gemini has declined to comment.
The Commodity Futures Trading Commission has also weighed in, arguing that prediction markets fall under its jurisdiction. Meanwhile, Kalshi, a major prediction market provider, was not named in the lawsuit but has its own ongoing legal case regarding the applicability of state gambling laws to its platform.
New York State Attorney General Letitia James has emphasized that these products are illegal gambling operations that are not exempt from state laws and regulations.