Letitia James Sues Coinbase and Gemini Over Unlicensed Prediction Market Gambling in New York

New York Attorney General Letitia James sued Coinbase and Gemini on Tuesday, accusing the crypto exchanges of operating prediction market platforms that violate state gambling laws.

“New York sues Coinbase, Gemini over prediction market offerings New York has become the latest state to argue that prediction market contracts touching on sports and entertainment violate state gambling laws”

@coindesk

The lawsuits, filed in state court in Manhattan, seek to bar the companies’ platforms from operating in New York unless and until they obtain licenses from the state Gaming Commission.

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James said in a statement, “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” and she added that “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails.”

CoinDesk reported that New York’s case argues Coinbase and Gemini’s prediction market offerings are “really unlicensed gambling products,” pointing to how the companies advertised their prediction markets and their role as bookmakers on the platforms.

The NYAG’s office described the platforms’ behavior by calling users “bettors” and saying that “each contract is a bet,” according to CoinDesk.

The suits also argued that the platforms allow people to place bets between the ages of 18 and 21, when New York bars anyone under 21 from gambling on mobile apps, CoinDesk reported.

The Hill similarly described James’s argument that the platforms fall within the state’s definition of gambling and are “running afoul of state tax obligations and gambling restrictions on New Yorkers under 21 years old.”

New York’s lawsuits frame prediction markets as wagering rather than regulated financial products, and they emphasize both the platforms’ mechanics and the companies’ licensing status.

CoinDesk quoted language from the suit against Coinbase describing the offering as “quintessentially gambling,” saying it “allows a bettor to stake or risk money upon the outcome of a contest of chance or a future contingent event not under the bettor’s control or influence.”

Bitcoin Magazine

The AP-style account in “NY State of Politics” said the lawsuit seeks court orders requiring the companies to obtain licenses from the state Gaming Commission before operating.

PYMNTS reported that New York’s Office of the Attorney General alleged the platforms fit New York’s legal definition of gambling, that Coinbase and Gemini failed to obtain a license from the New York State Gaming Commission, and that the prediction markets are available to users between the ages of 18 and 20.

Forbes and Decrypt both described the state’s damages demands, with Decrypt saying New York is seeking a minimum of $2.2 billion in damages from Coinbase and at least $1.2 billion in damages from Gemini.

CoinDesk also reported that New York argued the companies are “really unlicensed gambling products,” and it tied that characterization to how the companies advertised their prediction markets and their role as bookmakers.

The Block likewise said the state is seeking a minimum of $2.2 billion from Coinbase and $1.2 billion from Gemini, citing court documents.

In addition to age and licensing, PYMNTS reported that the OAG alleged Coinbase and Gemini are violating state laws that forbid betting on games in which New York college teams participate, according to the release.

The Block added that the state is seeking court orders and described the age issue as “between the ages of 18 to 21,” while New York law says a person has to be “at 21 years old to participate in mobile sports betting.”

Coinbase and Gemini responded by arguing that prediction markets fall under federal oversight rather than state gambling rules.

“New York Attorney General Letitia James (D) is suing two cryptocurrency exchanges operating prediction market platforms, alleging they skirt the state’s gambling laws”

Bloomberg Law News

CoinDesk reported that Coinbase Chief Legal Officer Paul Grewal said in a post on X that “prediction markets are federally regulated national exchanges” and that Coinbase would fight for federal oversight.

The Hill similarly quoted Grewal saying “prediction markets are federally regulated national exchanges” under the Commodity Futures Trading Commission (CFTC) and that “This issue is proceeding in New York federal court as we speak,” adding that “Coinbase will continue to fight for the federal oversight of these markets that Congress intended.”

Decrypt also reproduced Grewal’s statement, including “This issue is proceeding in New York federal court as we speak,” and said Coinbase referred Decrypt to Grewal’s X post when asked for comment.

PYMNTS reported that Gemini did not immediately reply to a request for comment, and CoinDesk’s update said it added Gemini declining to comment.

The Block likewise said Gemini and Coinbase did not immediately respond to a request for comment from The Block.

Beyond the companies’ own positions, the sources describe the CFTC’s role in the broader regulatory dispute over prediction markets.

CoinDesk said Commodity Futures Trading Commission Chairman Mike Selig argued that prediction markets “fall under his agency's "exclusive jurisdiction."”

CoinDesk added that the CFTC has filed suit against Arizona, Connecticut and Illinois to block them from bringing charges against prediction market providers.

“NY State of Politics” said Kalshi sued the state Gaming Commission in October and argued that, as a federally designated derivatives exchange, it is subject to the exclusive jurisdiction of the CFTC, and it said Coinbase made the same argument in December when it sued Connecticut, Michigan and Illinois to block those states from attempting to regulate its prediction business.

The New York lawsuits arrive in the middle of a multi-state and federal regulatory standoff over whether prediction markets are gambling under state law or commodity derivatives under federal oversight.

CoinDesk said New York is “just the latest state to sue prediction market providers over their sports and entertainment products,” and it listed Nevada and Washington among others that have filed suit, with the dispute “sits before multiple appeals courts” and “likely to wind up before the U.S. Supreme Court.”

CNBC

Forbes described the situation as a “jurisdictional brawl between state and federal regulators,” and it pointed to the CFTC’s April 2 suit against Arizona, Connecticut, and Illinois.

Decrypt similarly said the state’s lawsuits are part of a broader enforcement effort and noted that prediction market platforms argue they are regulated at the federal level by the CFTC.

The Hill said the lawsuit marks “the latest in a series of legal battles with states over the platforms,” and it described mixed results in court for states accusing prediction markets of circumventing gambling laws.

CoinDesk also said the CFTC has filed to join another case out of Nevada to defend prediction market providers, and it noted that Kalshi was not named as a defendant on Tuesday.

“NY State of Politics” added that a federal judge halted Arizona’s regulatory efforts, including criminal charges against Kalshi, finding that the federal commission had demonstrated a “reasonable chance of success” in showing that the act preempts Arizona law.

The Block described how the issue has moved into the courts, saying earlier this month the CFTC sued Illinois, Arizona, and Connecticut over actions to shut down what the agency calls “federally regulated designated contract markets.”

CoinDesk said Kalshi preemptively sued the New York State Gaming Commission last fall, asking a federal court to rule that state gambling laws do not apply to its platform, and it said that case is still working its way through the Southern District of New York courthouse.

Together, the sources depict New York’s action as both a direct attempt to stop Coinbase and Gemini and a continuation of a broader jurisdictional contest that multiple outlets tie to the Supreme Court.

The lawsuits seek not only to stop Coinbase and Gemini’s prediction market offerings in New York but also to impose financial penalties and restitution, according to multiple outlets.

“New York sues Coinbase, Gemini over prediction market offerings New York has become the latest state to argue that prediction market contracts touching on sports and entertainment violate state gambling laws”

CoinDesk

PYMNTS said the OAG alleged the platforms fit New York’s legal definition of gambling, failed to obtain a license from the New York State Gaming Commission, and that the lawsuits seek court orders requiring the companies to pay fines, forfeit illegal profits and pay restitution to customers, per the release.

CoinDesk

The Defiant and Bitcoin Magazine both described the state’s requested remedies in similar terms, with Bitcoin Magazine stating that the complaints seek court orders requiring the companies to forfeit profits earned from the prediction markets and that the state also seeks civil fines equal to three times those profits and restitution for affected users.

Decrypt and The Block both reported the state’s damages demands, with Decrypt saying New York is seeking a minimum of $2.2 billion in damages from Coinbase and at least $1.2 billion in damages from Gemini, and The Block repeating those figures.

The Block also described the state’s concern about young users, saying the lawsuit “took particular issue” with platforms allowing people between the ages of 18 and 21 while New York law says a person has to be “at 21 years old to participate in mobile sports betting.”

The Defiant added that the AG cited research showing early exposure to gambling increases risks of depression, anxiety, and financial stress, and it said the platforms lack necessary consumer protections.

CoinDesk reported that the suits also argued the platforms allow bets between the ages of 18 and 21, when New York bars anyone under 21 from gambling on mobile apps.

Beyond New York’s immediate case, the sources describe how the litigation could shape the broader prediction market industry, with CoinDesk saying the issue sits before multiple appeals courts and is likely to reach the U.S. Supreme Court.

Forbes likewise framed the dispute as likely to head to the Supreme Court, and it described the legal fight as a jurisdictional contest between state and federal regulators.