The state of New York has filed lawsuits against Coinbase and Gemini, alleging their prediction market products violate state gambling laws. The legal action was announced by Letitia James, who argued that contracts tied to sports, entertainment and election outcomes function as unlicensed gambling products.
According to the lawsuits, the platforms act similarly to bookmakers, allowing users to stake money on uncertain future events. State regulators described users as bettors and stated that each prediction contract effectively represents a wager. Officials also raised concerns that users aged 18 to 21 could participate, despite New York law restricting mobile gambling to individuals 21 and older.
Growing Legal Conflict Between State and Federal Authorities
New York joins other states, including Nevada and Washington, that have challenged prediction market offerings, particularly those linked to sports outcomes. The legal debate centers on whether such contracts qualify as gambling products or federally regulated financial instruments.
Paul Grewal stated that prediction markets operate as federally regulated exchanges and confirmed the company intends to challenge the lawsuit. Meanwhile, Mike Selig has argued that prediction markets fall under the Commodity Futures Trading Commission jurisdiction, not state gambling authorities.
Broader Legal Battle May Reach Supreme Court
The dispute is part of a wider legal conflict involving multiple states and federal agencies, with several cases already moving through appeals courts. Industry observers expect the issue could ultimately reach the US Supreme Court, where a final ruling may determine how prediction markets are regulated nationwide.
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