New York AG Sues Coinbase, Gemini Over Prediction Markets

New York Attorney General Letitia James filed lawsuits Tuesday in Manhattan against Coinbase Financial Markets and Gemini Titan, alleging their prediction markets operate as illegal, unlicensed gambling operations. The complaints were filed in state court.

The filings say both platforms let users wager money on outcomes such as sports events and elections without licenses from the New York State Gaming Commission. James argued the contracts function as bets because users cannot influence event outcomes and noted the platforms allow 18-year-olds to participate while New York requires mobile sports bettors to be at least 21. “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James wrote.

James seeks disgorgement of profits, civil fines up to three times those profits, refunds to affected customers, an order barring wagers by people under 21 and a ban on advertising on college campuses.

Coinbase pushed back through its chief legal officer, Paul Grewal, who said the company will continue to press for federal oversight of prediction markets, which it argues Congress intended. Gemini, run by Tyler and Cameron Winklevoss, declined to comment. Both companies launched their prediction products in mid-December and have made them available across all 50 states.

The suits add a state attorney general to a dispute over whether prediction markets fall under state gambling law or federal oversight by the Commodity Futures Trading Commission. In early April the CFTC sued Arizona, Connecticut and Illinois, arguing states cannot impose conflicting rules. A federal appeals court in Philadelphia ruled for prediction market firm Kalshi, finding New Jersey regulators lacked authority to ban its sports-related contracts.

States have continued to take action. Nevada obtained temporary orders blocking Kalshi and Coinbase from operating in the state, and Kalshi has sued New York’s Gaming Commission in federal court to challenge potential restrictions.

On Capitol Hill at least eight bills addressing prediction markets have been introduced since January. Lawmakers cited insider trading risks after reports that a Polymarket user earned roughly $400,000 predicting the removal of Venezuela’s President Nicolás Maduro and after bets placed shortly before U.S. strikes on Iran drew scrutiny. Senator Jeff Merkley called prediction markets “a real danger to our democracy and ripe for exploitation by public officials with insider information.” Senator Todd Young, a Republican, urged that political considerations should not prevent congressional action.

Senator Chris Murphy, who co-led a bill to bar government officials from profiting on war and political bets, told reporters the chance of passing legislation this Congress was “slim to none.” Donald Trump Jr. serves as an unpaid adviser to Polymarket and as a paid adviser to Kalshi, and the Trump family media company has announced plans for a prediction market called Truth Predict. White House spokesperson Davis Ingle said the president has been clear that officials should not use nonpublic information for financial gain and that insider trading is already illegal.

For now the lawsuits create parallel legal fights in state and federal venues over where regulatory authority lies for prediction markets.