New York Sues Coinbase and Gemini Over Alleged Illegal Prediction Market Gambling Operations

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New York Attorney General Letitia James has filed lawsuits against Coinbase Financial Markets and Gemini Titan, alleging that both companies operate illegal gambling platforms through prediction markets available in New York. The lawsuits claim that Coinbase and Gemini allow users to place bets on outcomes of events including sports games, entertainment awards, and elections. According to the complaint, these markets function as gambling under New York law because users risk money on uncertain outcomes outside their control. Attorney General James stated that the platforms operate without licenses from the New York State Gaming Commission. The state requires licensing for gambling operations, including mobile sports betting. The lawsuits assert that Coinbase and Gemini have not obtained such approval while offering their products to users in New York. The filings state that users aged 18 to 20 can access the platforms. New York law sets 21 as the minimum age for mobile sports betting. The Attorney General’s office argues that this access exposes younger users to financial risk and potential harm. The complaints seek court orders requiring the companies to forfeit profits earned from the prediction markets. The state also seeks civil fines equal to three times those profits and restitution for affected users. The filings request restrictions on participation by users under 21 and limits on marketing practices that reach college campuses. New York Attorney General: Prediction markets are gambling The lawsuits describe prediction markets as systems where users trade contracts tied to event outcomes. The Attorney General’s office argues that these contracts meet the legal definition of gambling because outcomes depend on chance or external events rather than user control. The filings reference research from the National Institutes of Health that links early exposure to gambling with increased risk of anxiety, depression, and financial strain. The lawsuits also cite research from the American Psychological Association stating that a significant share of individuals with gambling disorders report suicidal ideation. The complaints include allegations that the platforms allow betting on events involving New York college teams, which state law restricts. Coinbase and Gemini launched prediction markets in mid-December and operate in all 50 states, according to court documents referenced in the filings. The Attorney General’s office states that the platforms present themselves as financial products while functioning as gambling systems. The legal action forms part of a broader enforcement effort by New York authorities targeting online gambling and crypto-related platforms. The Attorney General’s office has previously taken action against video game companies and sweepstakes casino operators for alleged violations of state gambling laws. The lawsuits also highlight ongoing regulatory disputes between state and federal authorities over prediction markets. The Commodity Futures Trading Commission has asserted federal jurisdiction over certain event-based contracts. Federal court cases have addressed whether state regulators can restrict such markets under gambling laws.

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