New York has taken its crackdown on crypto platforms into prediction markets. According to the source article, the New York Attorney General filed lawsuits on April 21, 2026 against Coinbase Financial Markets and Gemini Titan, alleging that their event-based trading platforms amount to illegal gambling under state law.
The products at issue let users trade “yes/no” style contracts tied to real-world outcomes, including elections, sports, and economic indicators. New York’s theory is blunt: if users put money on outcomes outside their control, the activity is a wager, not a lawful financial instrument. The state also says the platforms operated without the licenses required by state gaming authorities and pointed to access by users as young as 18, even though sports betting in New York requires participants to be 21 or older.
The case turns on whether these contracts are wagers or derivatives
The dispute reaches well beyond the products themselves. The article says Coinbase Chief Legal Officer Paul Grewal has maintained that prediction markets should fall under federal oversight by the CFTC, not state enforcement. Lawyers and former regulators backing that view argue that event contracts fit within the category of derivatives, which are already governed by federal rules.
The piece also cites Mike Selig, who has argued that once a product qualifies as a derivative, a state should not be able to recast it as gambling. On the other side, New York Attorney General Letitia James and other state authorities are pressing the opposite view: no amount of financial structuring changes the basic substance if the product is still a wager on an uncertain event. In that reading, gambling remains within the states’ traditional police powers.
New York is seeking disgorgement, restitution, and statutory penalties
The relief described in the article is broad. New York is not only trying to stop the business lines in question, it is also seeking disgorgement of profits, civil penalties of up to three times the alleged gains, full restitution to users, and injunctive relief that could shut down the offerings.
One of the sharpest points in the complaints is the request for statutory penalties of $100,000 per offer or attempted offer of sports wagering. The article notes that the Office of the Attorney General alone allegedly placed 22,000 bets on Coinbase. It also says it is still unclear whether those wagers would count toward the penalty base, but the figure gives a sense of the scale of exposure facing Coinbase and Gemini. New York is also demanding a full accounting of the alleged gambling operations, including total bets placed, customer losses, and all revenue received.