New York Attorney General Letitia James has filed lawsuits against Coinbase Financial Markets and Gemini Titan, alleging that both companies operate illegal gambling platforms through prediction markets available in New York. The lawsuits claim that Coinbase and Gemini allow users to place bets on outcomes of events including sports games, entertainment awards, and elections. According to the complaint, these markets function as gambling under New York law because users risk money on uncertain outcomes outside their control.
Attorney General James stated that the platforms operate without licenses from the New York State Gaming Commission. The state requires licensing for gambling operations, including mobile sports betting. The lawsuits assert that Coinbase and Gemini have not obtained such approval while offering their products to users in New York. The filings state that users aged 18 to 20 can access the platforms. New York law sets 21 as the minimum age for mobile sports betting. The Attorney General's office argues that this access exposes younger users to financial risk and potential harm.
Legal Definition of Gambling and Prediction Markets
The lawsuits describe prediction markets as systems where users trade contracts tied to event outcomes. The Attorney General's office argues that these contracts meet the legal definition of gambling because outcomes depend on chance or external events rather than user control. The filings reference research from the National Institutes of Health that links early exposure to gambling with increased risk of anxiety, depression, and financial strain. The lawsuits also cite research from the American Psychological Association stating that a significant share of individuals with gambling disorders report suicidal ideation.
The complaints include allegations that the platforms allow betting on events involving New York college teams, which state law restricts. Coinbase and Gemini launched prediction markets in mid-December and operate in all 50 states, according to court documents referenced in the filings. The Attorney General's office states that the platforms present themselves as financial products while functioning as gambling systems.
Risks to Young Users
The lawsuit specifically highlights the vulnerability of younger users. New York state law sets the minimum age for mobile sports betting at 21, but the platforms allow users aged 18 to 20 to participate. The Attorney General's office argues this violates the protective intent of the law and exposes young people to gambling without adequate risk awareness. The complaint seeks court orders restricting participation by users under 21 and limiting marketing practices that target college campuses.
Regulatory Conflict: State vs. Federal Jurisdiction
This legal action is part of a broader enforcement effort by New York authorities targeting online gambling and crypto-related platforms. The Attorney General's office has previously taken action against video game companies and sweepstakes casino operators. Meanwhile, the Commodity Futures Trading Commission (CFTC) has asserted federal jurisdiction over certain event-based contracts, leading to federal court cases that question whether state regulators can restrict such markets under gambling laws. This case will further intensify the jurisdictional battle between state and federal regulators.
Remedies Sought
The complaint seeks court orders requiring the companies to forfeit profits earned from the prediction markets. The state also seeks civil fines equal to three times those profits and restitution for affected users. The filings request restrictions on participation by users under 21 and limits on marketing practices that reach college campuses. These measures aim to eliminate the economic incentives of illegal gambling activities and protect consumers, especially young individuals, from harm.
Coinbase and Gemini have not yet publicly responded to the lawsuit. The outcome of this case will have significant implications for the cryptocurrency industry and prediction market sector, and will provide new legal precedents for the division of state and federal regulatory authority.