New York AG Sues Coinbase and Gemini, Calls Crypto Prediction Markets ‘Illegal Gambling’

New York Attorney General Letitia James has sued Coinbase Financial Markets and Gemini Titan, alleging their crypto prediction-market products amount to illegal gambling under state law.

The lawsuits, as reported by Reuters, accuse both companies of offering users the ability to bet on outcomes including sports, entertainment and elections without licences from the New York State Gaming Commission. 

The Attorney General’s office said the products meet New York’s definition of gambling because the outcomes are uncertain, outside the bettor’s control, or dependent on chance.

The suits seek fines, forfeiture of illegal profits and restitution to harmed customers. The complaints were filed in state court in Manhattan and seek to bar the platforms from operating in New York unless they obtain state Gaming Commission licences.

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Gambling Law Challenge

James framed the products as gambling regardless of the prediction-market label. 

Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.

New York Attorney General Letitia James

The Attorney General’s office also raised consumer-protection concerns, highlighting that platforms are available to users aged 18 to 20, even though New York mobile sports betting is limited to people at least 21, and alleged the platforms violated restrictions on betting involving New York college teams.

James stated that the companies’ “so-called prediction markets are just illegal gambling operations,” adding that the products exposed young people to addictive platforms without necessary guardrails.

The cases add another state-level challenge to a sector already testing the boundary between federally regulated derivatives and state gambling law and, evidently, Polymarket and Kalshi are at the center of it. 

Kalshi even sued the New York State Gaming Commission in Manhattan federal court, arguing that New York lacks the authority over its markets because Kalshi operates under the laws of the CFTC.

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