TLDR
- New York Attorney General Letitia James has sued Coinbase and Gemini over alleged illegal gambling on their prediction market platforms.
- The state seeks at least $2.2 billion from Coinbase and $1.2 billion from Gemini in penalties and forfeited profits.
- James claims the platforms allowed users aged 18 to 21 to place sports-related bets, which violates New York law.
- Coinbase argues that prediction markets fall under federal oversight by the Commodity Futures Trading Commission.
- The legal dispute adds to ongoing court battles between the CFTC and several U.S. states over event-based trading platforms.
New York Attorney General Letitia James has filed lawsuits against Coinbase and Gemini over their prediction market platforms. She alleges the companies offered illegal gambling services tied to sports and elections. The state seeks billions in penalties, restitution, and forfeiture of profits.
Coinbase Faces Claims Over Prediction Market Access
James filed the complaint in New York federal court and named Coinbase as a defendant. She claims the company allowed users to place event-based bets through a prediction market platform. The complaint seeks at least $2.2 billion in penalties and forfeited profits.
James said the platform allowed users between 18 and 21 to participate in sports-related contracts. However, New York law requires users to be 21 for mobile sports betting. She stated, “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.”
She also argued that the platform lacked required safeguards under state gaming rules. Therefore, her office seeks restitution for affected users and permanent injunctive relief. The filing asks the court to bar further operations that violate New York gambling statutes.
Coinbase Chief Legal Officer Paul Grewal responded publicly on X. He said, “Prediction markets are federally regulated by the CFTC.” He added that the dispute is now proceeding in New York federal court.
Grewal said Congress intended federal oversight for these markets. He stated that Coinbase will continue to defend that position in court. Earlier this year, Coinbase rolled out nationwide access through its partnership with Kalshi.
Kalshi operates under regulation by the Commodity Futures Trading Commission. Coinbase integrated the offering to expand its event-based trading services. The lawsuit now places that structure under judicial review.
Gemini Also Targeted in State Action
James also sued Gemini over its own prediction market operations. The complaint seeks at least $1.2 billion from the exchange. The state alleges Gemini Titan offered event-based contracts without state authorization.
According to the filing, Gemini allowed participation by users under 21. New York law bars individuals under 21 from mobile sports wagering. James argued that the platform functioned as an unlicensed gambling operation.
She stated that these services exposed young users to addictive platforms without guardrails. Her office claims the companies bypassed state constitutional limits on gambling. The lawsuit demands forfeiture of profits and restitution for users.
The regulatory dispute has expanded beyond New York. CFTC Chairman Michael Selig has said prediction market platforms fall under his agency’s exclusive jurisdiction. However, several states have challenged that view in court.
Earlier this month, the CFTC sued Illinois, Arizona, and Connecticut. The agency claims those states attempted to shut down federally regulated designated contract markets. The New York cases now add to the growing legal conflict over event-based trading platforms.