New York Attorney General, Letitia James, has sued crypto exchanges, Coinbase and Gemini, alleging their prediction market offerings amount to illegal gambling under state law, court filings show.
The lawsuits, filed in Manhattan state court, claim the companies operated unlicensed platforms that allow users to trade on the outcomes of events such as sports and elections without approval from the New York State Gaming Commission.
James said the so-called ‘event contracts’ are ‘quintessentially gambling’ because outcomes are outside users’ control and rely on chance, adding that ‘gambling by another name is still gambling.’
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The state also alleges the platforms allowed users aged 18 to 20, below New York’s legal betting age of 21, and failed to comply with regulations imposed on licensed sportsbooks.
New York is seeking to halt the businesses unless they obtain licenses, and is asking for financial penalties including disgorgement of profits, civil fines, and restitution for customers.
The cases come amid a broader jurisdictional dispute between state regulators and the federal Commodity Futures Trading Commission which has argued it holds primary authority over prediction markets.
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A spokesperson for Coinbase said the company would continue to push for federal oversight of such markets while Gemini did not immediately respond to requests for comment.
Prediction markets have grown rapidly in popularity since 2024.
Polymarket aims to raise $400 million at a $15 billion valuation highlighting investor apptetite and continues expansion.
This comes just a few weeks after Kalshi, Polymarket’s main competitor, raised a massive $1 billion at a $22 billion valuation.
All of the above is intensifying regulatory scrutiny and setting up a legal battle over whether they should be treated as financial instruments or gambling products.
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