News: New York AG Sues Coinbase, Gemini Over Prediction Markets
New York Attorney General Letitia James sued Coinbase and Gemini today, alleging that they are “illegally running gambling operations in New York through their so-called ‘prediction market’ platforms.”
Kalshi, Polymarket and other prediction markets were not part of any legal action announced in New York on Tuesday.
Both Coinbase and Gemini offer users the ability to bet on events, including sports, entertainment, and elections, in violation of New York laws. An investigation by the Office of the Attorney General (OAG) found that Coinbase and Gemini are running prediction markets that constitute illegal, unlicensed gambling operations. These illegal operations expose New Yorkers – including those under the legal gambling age of 21 – to serious financial and personal risk. Attorney General James is seeking court orders requiring Coinbase and Gemini to pay fines, forfeit illegal profits, and pay restitution to customers.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” said Attorney General James. “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails. My office is taking action to protect New Yorkers and stop these platforms from violating the law.”
Coinbase and Gemini opened prediction markets available to New Yorkers over the age of 18. Prediction markets allow users to bet money on the outcome of a wide range of future events, from sports games to elections to award shows. Because the outcomes of these events are uncertain and outside the control of the bettor, or hinge on a game of chance, these prediction market platforms fit the legal definition of gambling in New York.
Coinbase and Gemini have failed to obtain a license from the New York State Gaming Commission, sidestepping their obligation to pay taxes like licensed casinos and mobile sports gambling platforms do. This tax revenue funds public schools, sports programs for underserved youth, and problem gambling education and treatment. Coinbase and Gemini’s prediction markets are also available to users between the ages of 18-20, even though New York law states that a person must be at least 21 years old to participate in mobile sports betting. …
In her lawsuits filed today, Attorney General James is asking the court to require Coinbase and Gemini to forfeit illegal profits, distribute restitution to consumers who were harmed, and pay fines equal to three times the profits the companies made through their illegal actions.
You can see the complaints against the two companies here:
The action from New York’s AG is the latest example of states moving against prediction markets in state court.
The normal cadence of legal battles has involved states issuing cease-and-desist orders, followed by prediction markets suing states in federal court. But in recent months, Nevada, Massachusetts, and Arizona have all looked to state courts to curtail prediction markets in their jurisdictions.
Why would the AG not include Kalshi? Merely because of CFTC?