New York Attorney General Letitia James has launched lawsuits against Coinbase Financial Markets and Gemini Titan, alleging both companies operated illegal prediction markets for users in the state. The filings contend the platforms enabled users to risk funds on outcomes of sporting events, entertainment awards, and elections, classifying these activities as gambling under New York law.
Regulatory action targets unlicensed platforms
Letitia James, who leads enforcement efforts against financial misconduct as New York’s Attorney General, claims that neither Coinbase nor Gemini secured a gaming license from the New York State Gaming Commission. Operating without this approval, the companies are accused of providing unauthorized access to such markets based on events outside the individual’s control.
New York’s regulations require a minimum age of 21 for participants in licensed online betting activities, but evidence from the filings points to platform accessibility for users aged as young as 18. This alleged failure to implement age checks, according to the Attorney General’s office, has exposed underage users to financial risks.
The complaints also seek to impose strict penalties, including profit forfeiture, treble civil fines, and restitution to users impacted by the platforms’ operations. In addition, prosecutors are requesting that courts restrict under-21 participation and limit marketing activities directed at college campuses.
Debate over prediction markets’ legal status
The lawsuits characterize prediction markets as trading venues for contracts linked to real-world events, asserting that these contracts fit the statutory definition of gambling due to their reliance on chance and external outcomes. To support this claim, the filings reference studies by the National Institutes of Health and the American Psychological Association, which highlight potential mental health risks and increased anxiety from early participation in such activities.
Further allegations extend to platforms enabling wagers on events featuring New York college teams, a practice prohibited by state law. State officials argue that such offerings not only violate regulations, but also increase exposure for vulnerable groups.
Court documents reveal that Coinbase and Gemini launched their prediction market products in December, and currently make them available nationwide. The Attorney General’s filings state the platforms market these offerings as financial products, but the state contends that they actually function as gambling systems in practice.
Broader crackdown and regulatory tension
The legal dispute forms part of a wider clampdown by New York authorities on crypto-related and online prediction platforms. Letitia James previously took action against video gaming and online sweepstakes operators over similar concerns regarding unlicensed gambling products.
There is ongoing debate within the US over the jurisdictional boundaries between federal and state regulators, especially for prediction markets using blockchain technology. While the Commodity Futures Trading Commission claims some oversight over event-based contracts, federal courts have begun to weigh in on whether state governments can restrict these operations using state-level gambling statutes.
Coinbase is a major US-based cryptocurrency exchange founded in 2012, providing trading, custody, and wallet services for digital assets. Gemini, established in 2014 by Cameron and Tyler Winklevoss, also operates a regulated cryptocurrency exchange and offers a suite of related financial products.
