New York sues Coinbase and Gemini, seeking to halt unlicensed prediction market businesses
NEW YORK– New York is suing Coinbase and Gemini for unregulated and unlicensed prediction market platforms that the state says are illegal gambling operations.
Attorney General Letitia James’ lawsuit, filed Tuesday in state court in Manhattan, seeks to ban the companies’ platforms from operating in the state unless and until they obtain licenses from the state Gaming Commission.
“Gaming by any other name remains a game of chance, and it is not exempt from regulation under our state laws and Constitution,” James said in a statement. “The so-called prediction markets of Gemini and Coinbase are nothing more than illegal gambling operations, exposing young people to addictive platforms that lack the necessary safeguards.”
Messages seeking comment were left at Coinbase and Gemini. Both companies started as cryptocurrency trading platforms before moving into the prediction space, dominated by Kalshi and Polymarket.
Gemini, founded by brothers Cameron and Tyler Winklevoss, launched Gemini Predictions in December. Coinbase launched its market prediction service in January.
“Crypto was just the beginning,” the Gemini website said Tuesday, alongside a prediction box offering bets on things such as who will win the Chelsea-Brighton Premier League soccer match that day, when Kevin Warsh will be confirmed as Federal Reserve chairman and what the price of oil will be on Friday.
The New York lawsuit alleges that Coinbase and Gemini seek to “avoid the legal and financial consequences” of the state’s strict regulation of gambling “by offering what is essentially gambling under the guise of offering ‘event contracts’ in a ‘prediction marketplace.’
By operating without a license, the lawsuit says, Coinbase and Gemini’s prediction market businesses don’t pay the same taxes as licensed casinos and mobile sportsbooks, which are taxed by the state at a rate of about 51% of gross revenue. Additionally, according to the lawsuit, Coinbase and Gemini allow users as young as 18, while state law prohibits betting for anyone under 21.
Kalshi sued the state Gaming Commission in October after the commission sought to ban the company’s prediction market business from operating in the state. In the case, which is ongoing, Kalshi argues that as a federally designated derivatives exchange, it is subject to the exclusive jurisdiction of the federal regulator, the Commodity Futures Trading Commission.
Coinbase made the same argument in December when it sued Connecticut, Michigan and Illinois to block those states from attempting to regulate its prediction activities. Earlier this month, the Commodity Futures Trading Commission sued Arizona, Connecticut and Illinois to stop them from controlling prediction markets.
Last week, a federal judge halted Arizona’s regulatory efforts — which included criminal charges against Kalshi — ruling that the federal commission had demonstrated a reasonable chance of success by demonstrating that the law anticipated Arizona law.
