Attorney General Letitia James continued the nationwide legal fight against prediction markets Tuesday with twin suits against Coinbase and Gemini Titan, alleging that, under New York law, they’re running illegal gambling schemes.
Barring a few tightly regulated exceptions, in-person and online gambling is largely illegal in New York State. James said the two cryptocurrency-based platforms, which allow users to place monetary wagers on the outcome of sporting events, elections and various real-world events — from predicting the winners of televised competitions or what public or political figures may say or do — are operating as unlicensed gambling platforms in New York in violation of roughly half a dozen laws.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James said in a statement on the suits, filed in Manhattan Supreme Court. “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails.”
Beyond alleging that the prediction markets are breaking laws that prohibit unlicensed gambling in the state, James argued they’re also violating state laws that bar betting on college sports games and prohibit people under 21 from gambling, since their platforms are open to anyone over 18.
Gemini Titan did not respond to a request for comment. Coinbase Chief Legal Officer Paul Grewal told amNewYork Law that prediction markets are “federally regulated national exchanges” and the company believes they should be subject to federal, not state, oversight.
“Coinbase will continue to fight for the federal oversight of these markets that Congress intended,” Grewal said in a statement. “This issue is proceeding in New York federal court as we speak.”
Grewal is referring to cases in the Southern District of New York, where prediction market Polymarket has faced a class action for operating as an unregulated sports gambling company. Prediction market Kalshi’s also sued the New York State Gambling Commission, which sent it a cease and desist letter, in the same court.
In all cases, the prediction markets argue that they aren’t gambling platforms but federal exchanges that let people place bets on the outcomes of future events through trading “swaps.”
Outside of New York, prediction markets like Polymarket and Kalshi face well over a dozen similar suits in state and federal courts, where users and attorneys general allege they’re operating as illegal gambling platforms in their states, too.
In New Jersey, the Third Circuit Court of Appeals recently gave prediction markets a major victory, saying the state can’t regulate Kalshi. Judges agreed with the prediction market’s argument that the wagers happening on the platform are federally regulated trading swaps, not gambling.
Largely, though, suits over prediction markets remain pending, leaving their legality — and their fate across the country — up in the air.
Legal analysts have said the United States Supreme Court may take up the issue in the future.