In a recent lawsuit, the state of New York has targeted Coinbase and Gemini, alleging that their prediction market offerings constitute unlicensed gambling products. The lawsuit claims that these platforms have been advertising their prediction markets and acting as bookmakers, which is in direct contravention of state regulations. Furthermore, the platforms have been accused of allowing individuals between the ages of 18 and 21 to place bets, despite New York's laws prohibiting anyone under 21 from participating in mobile app gambling.
The lawsuit describes the prediction market platforms as facilitating 'bets' and characterizes users as 'bettors,' emphasizing that each contract represents a wager. New York is not alone in its pursuit, as other states, including Nevada and Washington, have also taken legal action against prediction market providers.
The issue is currently pending before multiple appeals courts and may ultimately be decided by the U.S. Supreme Court. In response, Coinbase's Chief Legal Officer, Paul Grewal, has asserted that prediction markets are federally regulated national exchanges and that the company will advocate for federal oversight.
Gemini, on the other hand, has declined to comment. The Commodity Futures Trading Commission Chairman, Mike Selig, has argued that prediction markets fall under his agency's exclusive jurisdiction. Kalshi, a major prediction market provider, was not named in the lawsuit but has previously taken preemptive 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,' emphasizing that 'gambling by another name is still gambling' and is subject to regulation under state laws and the Constitution.