NY AG Sues Coinbase, Gemini Over Prediction Markets

New York Attorney General Letitia James filed civil lawsuits against Coinbase and Gemini in Manhattan state court on Tuesday, alleging their prediction market platforms operate as illegal, unlicensed gambling businesses. The complaints seek permanent injunctions, restitution to customers, disgorgement of profits, damages and civil penalties.

The filings allege both exchanges offered sports-related contracts and wagering without a New York State Gaming Commission license and without paying the 51% gross-revenue tax imposed on licensed sportsbooks. The complaints include examples of sports-event contracts offered to users and say the platforms allowed customers aged 18 to 20 to participate in sports markets while New York sets the minimum betting age at 21.

In a statement, Attorney General Letitia James wrote, “gambling by another name is still gambling,” and described the platforms as exposing young people to addictive markets that lack required consumer protections. The suits seek court orders to bar the companies from operating the contested markets in New York.

The complaints assert a novel legal theory by invoking the federal Wire Act of 1961, alleging the exchanges used interstate wire communications to transmit bets on sporting events. Gaming attorney Daniel Wallach described the Wire Act claim as a first-of-its-kind law enforcement allegation against prediction markets. Federal appeals courts have previously held the Wire Act applies to internet sports betting.

Coinbase has argued that markets registered with the Commodity Futures Trading Commission fall under federal law and that the Commodity Exchange Act preempts state gambling statutes. Coinbase’s chief legal officer, Paul Grewal, posted on X that the company will press for federal oversight and that the Commodity Exchange Act preempts state gambling law. Coinbase has filed preemptive federal suits in Connecticut, Michigan and Illinois and has exercised its right to transfer the New York action to federal court.

Assistant Attorneys General Alejandra de Urioste and K. Brent Tomer, both former CFTC trial lawyers, are leading the state’s civil case against Gemini. The two previously worked on the CFTC’s 2022 enforcement action involving Gemini Trust, which settled in January 2025 with a $5 million payment and no admission of liability.

The New York lawsuits join a widening slate of enforcement actions across the United States. Nevada issued cease-and-desist orders against prediction market operators in March 2025. Massachusetts has pursued state-court enforcement, Arizona has brought criminal charges, and more than ten states are involved in litigation over whether CFTC-registered contract markets are subject to state gambling laws.

Notably absent from the New York complaints was Kalshi, the largest U.S. prediction market operator. Kalshi filed a federal suit in October 2025 asking a court to rule that state gambling laws cannot be applied to a CFTC-registered designated contract market; a motion for a preliminary injunction in that case remains pending. The CFTC has sued several states and has joined some private litigation challenging state enforcement against CFTC-regulated prediction markets.

The New York suits ask the Manhattan court to enjoin the companies from operating what the state labels an unlicensed gambling business and to order consumer restitution, disgorgement and civil penalties while the parties litigate competing state and federal claims.