New York Attorney General Letitia James filed lawsuits Tuesday against Coinbase Financial Markets and Gemini Titan, alleging their prediction market platforms violated state gambling laws.
James argued that both companies failed to secure licences from the New York State Gaming Commission and that their event contracts, covering outcomes such as sports and elections, mount to “quintessentially gambling.” She emphasised that wagers on events outside bettors’ control are considered games of chance under state law.
The lawsuits also raise concerns over age restrictions. James accused the Manhattan-based firms of allowing 18- to 20-year-olds to participate, despite state law requiring a minimum age of 21 for mobile sports betting. “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” she said in a statement.
Federal vs. state oversight
The cases arrive amid a broader clash between state regulators and the U.S. Commodity Futures Trading Commission (CFTC), which asserts exclusive authority over prediction markets as commodity derivatives.
States have historically resisted prediction markets, viewing them as gambling, while federal regulators have at times treated them as financial instruments. This tension has resurfaced repeatedly, especially around election-related contracts.
The Coinbase and Gemini lawsuits are not isolated. The Iowa Electronic Markets, launched in 1988, were among the first regulated prediction markets in the U.S. In the 2000s, Ireland-based Intrade gained popularity for betting on U.S. elections and global events. But in 2012, the CFTC charged Intrade with violating U.S. commodity trading laws, leading to its shutdown in 2013.
Coinbase’s Chief Legal Officer, Paul Grewal, responded: “Coinbase will continue to fight for the federal oversight of these markets that Congress intended.”
James is seeking to recover alleged illegal profits, impose civil penalties, triple those profits, provide restitution to customers, and bar wagers under 21. She also wants to restrict marketing on college campuses.
.@Gemini and @coinbase's so-called prediction markets are just illegal gambling operations that expose young people to addictive platforms.
— NY AG James (@NewYorkStateAG) April 21, 2026
Gambling by another name is still gambling. I'm suing to stop these platforms from breaking the law.https://t.co/DosDKe2un1
Rising popularity of prediction markets
Since 2024, prediction markets have surged in popularity, especially during the 2024 presidential election. Their probabilities were seen as more accurate than polling in forecasting Donald Trump’s victory over Kamala Harris. Coinbase and Gemini launched their platforms in December 2025, and both operate nationwide, according to court filings.
Legal battles across states
The CFTC itself sued Arizona, Connecticut, and Illinois on April 2 to block state regulation of prediction markets. Days later, a federal appeals court in Philadelphia sided with Kalshi, ruling that the CFTC had exclusive oversight of its sports-related contracts, limiting state regulators’ reach.
Kalshi also sued the New York State Gaming Commission last October to preempt restrictions on its event contracts, but the case is still pending. Meanwhile, Nevada regulators secured temporary injunctions against Kalshi and Coinbase, ceasing their operations in the state.
New York law bans unauthorised gambling, and its Constitution requires explicit licencing for games of chance. Attorney General James frames prediction markets as gambling contracts, placing them under state jurisdiction.
By contrast, the CFTC argues that event contracts are commodity derivatives, subject to federal regulation. Coinbase and Gemini are relying on federal preemption, which is the principle that federal law overrides conflicting state law. If courts agree, state gambling laws may not apply to these platforms.
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