New York files lawsuits against Coinbase and Gemini over prediction platforms

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New York files lawsuits

Highlights

New York filed lawsuits against Coinbase and Gemini, accusing their prediction markets of operating as unlicensed gambling.
The state claims the platforms allow users aged 18–21 to bet, violating New York gambling age restrictions.
The legal battle reflects a growing conflict between state gambling laws and federal financial regulation.

State’s allegations

According to the complaints filed on Tuesday, both Coinbase and Gemini actively marketed their prediction markets and positioned themselves as bookmakers. The New York Attorney General’s office described users as “players” and argued that each contract essentially functions as a bet.

The lawsuits also claim that the platforms permit individuals aged 18 to 21 to place wagers, even though New York law prohibits anyone under 21 from participating in mobile gambling. “What the defendant offers through its platform is, in essence, gambling,” the complaint against Coinbase states. “It allows a player to stake or risk something of value upon the outcome of a chance or contingent event not under the player’s control, upon an agreement that the player will receive something of value if a certain outcome occurs.”

Broader legal battle

New York joins Nevada, Washington, and several other states that have taken legal action against prediction market operators. The core dispute centers on whether these contracts should be treated as regulated financial instruments at the federal level or as illegal sports betting under state gambling laws. The issue is currently before multiple appellate courts and is widely expected to eventually reach the U.S. Supreme Court.

Coinbase’s chief legal officer, Paul Grewal, responded on X, stating that prediction markets are “nationally regulated exchanges” and that the company intends to defend federal oversight. A Gemini spokesperson declined to comment.

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Implications for the crypto industry

The lawsuits against Coinbase and Gemini represent a significant challenge for the rapidly growing prediction market sector within the cryptocurrency industry. The outcome could determine whether these platforms can continue operating across the United States under federal oversight or face strict state-by-state regulation as gambling operations.

A definitive ruling, particularly from the Supreme Court, would have far-reaching consequences for innovation and regulatory clarity in the digital asset space.

In an earlier report, we noted that the CLARITY Act advanced in the Senate Banking Committee amid push from lawmakers.

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