NY Sues Coinbase, Gemini Over ‘Illegal’ Prediction Markets (1)

New York Attorney General Letitia James (D) is suing two cryptocurrency exchanges operating prediction market platforms, alleging they skirt the state’s gambling laws.

The lawsuits appear to be the first targeting such prediction market platforms from the state’s top law enforcement official. It names as defendants Coinbase Financial Markets, Inc., and Gemini Titan LLC. Both companies offer prediction markets and are tied to parent cryptocurrency exchanges Coinbase and Gemini.

Both lawsuits accuse the platforms of “repeated and persistent” illegality on the sites in “flagrant disregard” of the state constitution and penal laws. Coinbase and Gemini have sought “to avoid the legal and financial consequences of New York’s close regulation of gambling” by offering wagering on event contracts, the lawsuits said.

James filed the lawsuits Tuesday in Manhattan’s state court. She accused the platforms of “illegally running gambling operation” in a statement and pointed to Coinbase and Gemini allowing users to trade on sports events, entertainment, and elections in violation of New York laws.

Coinbase Chief Legal Officer Paul Grewal said in a statement that prediction markets are federally regulated national exchanges registered with the Commodity Futures Trading Commission and said the matter was already being litigated in federal court.

“This issue is proceeding in New York federal court as we speak,” Grewal said. “Coinbase will continue to fight for the federal oversight of these markets that Congress intended.”

In New York, sports betting is legal but authorized and regulated through the New York Gaming Commission. Only residents 21 years or older are allowed to place wagers.

In October 2025, the state gaming commission sent Kalshi, Inc, a prominent prediction market platform, a cease-and-desist letter. The company promptly sued the commission and said federal law preempted state enforcement.

Neither Coinbase nor Gemini has a license from the state gaming commission and have “sidestepped their obligation to pay taxes like licensed casinos and mobile sports gambling platforms do,” James said. She added that the platforms expose underage New Yorkers to financial risk.

The attorney general’s office is seeking fines, forfeiture of profits, and damages for customers. The state also wants to compel companies operating prediction markets to obtain a license from the gaming commission if they want to stay active.

“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,” James said.