New York Attorney General Letitia James filed lawsuits Tuesday against Coinbase and Gemini, accusing both companies of running unlicensed prediction markets in the state. The complaints say users were able to place wagers on events such as sports contests and elections without the licenses required under New York law.
State authorities argue the platforms exposed New Yorkers to financial and personal risks, including users who were below the state’s gambling age threshold. According to the filings, Coinbase and Gemini allowed people aged 18 to 20 to participate, while New York requires users to be at least 21 for this kind of activity.
State says the products meet New York’s definition of gambling
The lawsuits claim the wagers involved outcomes outside the control of the participants, which the state says fits the legal definition of gambling. Regulators also allege that neither company obtained approval from the New York State Gaming Commission. James said betting tied to games involving New York college teams also violated state restrictions.
New York is also accusing the companies of avoiding taxes paid by licensed operators. Those funds are typically directed to education, youth programs, and gambling treatment services. In the cases, the attorney general is seeking civil penalties, forfeiture of profits, and restitution for affected users. The filings also ask for fines of up to three times the alleged revenue.
Coinbase argues prediction markets fall under federal oversight
Coinbase Chief Legal Officer Paul Grewal rejected the state’s position. He said prediction markets fall under federal oversight and that such venues operate as national exchanges regulated by the Commodity Futures Trading Commission, or CFTC. Grewal also said the jurisdiction dispute is already before a federal court in New York.
The case points to a wider conflict between state gambling rules and federal financial regulation. The source notes that states including Nevada and Washington have taken similar action against prediction market platforms.
Broader enforcement push and a separate Coinbase product change
James has kept up enforcement actions tied to crypto and online gambling. The source says her office sued Valve in January 2026 over alleged gambling promotion in video games. Earlier actions also shut down multiple sweepstakes platforms that offered cash-like rewards.
Separately, Coinbase confirmed changes to its derivatives lineup. The company said it suspended trading in certain perpetual futures contracts and settled open positions, saying the move was intended to maintain market quality and streamline its product offerings.