Key Highlights
- New York has sued Coinbase and Gemini, alleging their prediction markets constitute illegal gambling without required licenses.
- The state claims users aged 18–20 were allowed to participate, below New York’s legal betting age of 21.
- The case adds to a broader U.S. dispute over how prediction markets should be regulated.
New York City, through Attorney General Letitia James, has filed lawsuits in Manhattan state court against Coinbase Financial Markets and Gemini Titan.
The state accuses both crypto firms of breaking gambling laws through their prediction market products. According to the official release, the case was filed today and alleges that both platforms allowed users to trade on real-world events without proper approval from the state.
What the lawsuit is about
According to the complaint, Coinbase and Gemini offered markets where users could bet on outcomes such as sports results and elections. The attorney general said these outcomes depend on chance and are outside the control of users, which brings them under New York’s legal definition of gambling.
The state also alleges that neither platform obtained the required licenses from the New York State Gaming Commission before operating these services.
Letitia James stated, “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.” She also raised concerns that users between the ages of 18 and 20 were allowed to use these platforms, even though New York sets the legal age for mobile sports betting at 21.
Penalties and state demands
New York asked the court to force both companies to give up the profits they made from these products. It is also pursuing financial penalties that could be up to three times the amount of those profits.
Additionally, the state is requesting restitution for users who may have lost money and restrictions that would block users under 21 from using these services and block advertising on college campuses.
Coinbase’s and Gemini’s entry into prediction markets
Coinbase launched its prediction market product in January 2026 through a partnership with Kalshi. The service allows users to trade on expected outcomes across areas such as sports, politics, and culture, positioning it as a way to “trade your takes” on real-world events.
Meanwhile, Gemini Titan launched its own market in late December 2025 after getting approval from the U.S. Commodity Futures Trading Commission as a regulated contract market.
Regulatory clashes over the market
The lawsuits come amid broader regulatory uncertainty in the United States regarding prediction markets. Courts and regulators remain divided on whether such platforms should be treated as financial instruments or gambling services.
Earlier this month, a court ruled that New Jersey could not enforce its gambling rules against Kalshi. Meanwhile, the Commodity Futures Trading Commission has challenged state-level attempts to regulate these services, while Nevada has banned Kalshi from offering this product in the state.
New York has a long history of strict action against crypto companies. Coinbase previously paid a $100 million settlement over compliance issues with state regulators and has faced lawsuits from federal agencies over securities and business practices.
Gemini has also faced penalties, including a $50 million recovery order linked to its Earn product, where regulators said users were not properly informed about risks.
Overall, the new lawsuits add pressure on Coinbase and Gemini as legal clarity around prediction markets continues to evolve. Courts will play a key role in determining where these platforms fall under financial regulation or gambling laws.
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