New York Sues Coinbase, Gemini Over Prediction Markets

New York Attorney General Letitia James sued Coinbase Financial Markets and Gemini Titan on April 21, accusing them of running prediction markets in violation of state gambling laws.

In the petitions, James said that Coinbase and Gemini failed to obtain the gambling licenses required for their “event contract” platforms, which allow users to wager on the outcomes of real-world events ranging from weather to sports to elections.

Both platforms allow users to take a “Yes” or “No” position on whether a future event will occur by purchasing contracts priced in cents that reflect the market’s implied odds. The contracts pay out only if the predicted event happens.

While Coinbase and Gemini describe these activities as trading, the state argues they are gambling.

“Each contract is a bet,” the petitions state, adding that because a user’s return depends on the outcome of a future contingent event outside the person’s control, the contracts fit New York’s legal definition of gambling.

“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James said in a statement.

James is seeking a penalty equal to three times the respondent’s gain from the alleged illegal conduct, restitution for customers, and penalties of $100,000 for each offering or attempted offer of sports wagering or mobile sports wagering in the state without authorization. She also wants to stop them from allowing users under 21 to wager and from marketing their platforms on college campuses.

The lawsuits add to an increasingly crowded legal battlefield over who has primary control over event-contract markets: state or federal authorities. The U.S. Commodity Futures Trading Commission (CFTC) states it has exclusive authority to regulate these markets and has recently sued regulators in Arizona, Connecticut, and Illinois for attempting to block or restrict operators.

The Epoch Times reached out to Gemini but did not receive a response by publication time.

Coinbase Chief Legal Officer Paul Grewal rejected the allegations and emphasized that the platform falls under federal, not state, oversight.

“Prediction markets are federally regulated national exchanges, registered with the CFTC,” Grewal wrote in a post on X. “Coinbase will continue to fight for the federal oversight of these markets that Congress intended.”

The CFTC did not respond to a request for comment. On its website, the agency advises consumers to trade only with entities registered with it.

“You may have little or no protections if you choose to trade with unregistered entities that operate outside the United States,” it states.